"^^.^ 


theoretical  man 
knows  why.  The 
practical  man 
knows  ^ON^ 


man 


vihy  and  horn. 


Accountancy 

and 

Business   Management 


A   General  Reference   Work  on 

BOOKKEEPING,      ACCOUNTIxNG,      AUDITING,       COMMERCIAL     LAW,      BUSINESS 

ORGANIZATION,     FACTORY     ORGANIZATION,      BUSINESS     MANAGEMENT, 

BANKING,     ADVERTISING,     SELLING,     OFFICE    AND    FACTORY 

RECORDS,     COST     KEEPING,     SYSTEMATIZING,     ETC. 


Prepared  by  a   Corps  oj 


AUDITORS,     ACCOUNTANTS,     ATTORNEYS,     AND    SPECIALISTS    IN     BUSINESS 
METHODS    AND    MANAGEMENT 


Illustrated  with  over  Fifteen  Hundred  Engravin£S 


SEVEN  VOLUMES 


CHICAGO 
AMERICAN  TE(MINICAL  SOCIETY 

r»2i 


i  0  G5r6 


Copyright,  1909.  1920 

BT 

AMERICAN  TECHNICAL   SOCIETY 


Copyrighted  in  Great  Britain 
AH  Rigbts  Reserved 


5oL  i 
'    ;■( 

\      \ 

Authors  and  Collaborators 


JAMES  BRAY  GRIFFITH 

Formerly  Head,  Dept.  of  Commoroo,  Aceountancy,  and  nusiiioss  Administration, 
Ampripa«  Scliool  of  rorrospondoncc. 


ROBERT  H.  MONTGOMERY 

Of  the  Firm  of  Lybrand,  Ross  Bros.  &  Montgomery,  Certified  Public  Accountants. 
Editor  of  the  American  Edition  of  Dicksee's  Aiiditinc/. 

Formerly  Lecturer  on  Auditing  at  the  Evening  School  of  Accounts  and  Finance 
of  the  University  of  Pennsylvania,  and  the  School  of  Commerce,  Accounts, 
/n|  and  Finance  of  New  York  T'niversity. 


CO  '^ 


ARTHUR  LOWES  DICKINSON,  F.  C.  A.,  C.  P.  A. 

Of  the  Firms  of  Jones.  Caesar,  Dickinson,  Wilmot  &  Company,  Certified  Public 
Accountants,  and  Price,  Waterhouse  &  Company,  Chartered  Accountants. 


V    WILLIAM  M.  LYBRAND,  C.  P.  A. 
i 


^    N,  Of  the  Firm  of  I.ybrand,  Ross  Bros.  &  Montgomery,  Certified  Public  Accountants. 


^  F.  H.  MACPHERSON,  C.  A.,  C.  P.  A. 

^  Of  the  Firm  of  F.  H.  Macpherson  &  Co..  Certified  Public  Accountants. 


n? 


CHAS.  A.  SWEETLAND 

Consulting  Public  Accountant. 

Author  of  "I.oose-Leaf  Bookkeeping,"  and  "Anti-Confusion  Business  Jlethods." 

E.  C.  LANDIS 

Of  the  System  Depaitment,  Btn-roughs  .\ddlng  Machine  Company. 


JOHN  A.  CHAMBERLAIN,  A.  B.,  LL.  B. 

Of  the  Cleveland  Bar. 

Lecturer  on  Suretyship,  Western  Reserve  Law  School. 

Author  of  "Principles  of  Business  I^aw." 

^• 
GLENN  M.  HOBBS,  Ph.  D. 

Secretary  and  Educational  Director,  American  School  of  Correspondence. 
Formerly  Instructor  in  Physics,  IhiiviTslty  of  Chicago. 
American  Physical  Society. 
Member,  Sigma  Xi  Society. 


Authors  and  Collaborators — Continued 


GEORGE  C.  RUSSELL 

Systemafizor. 

Formorly  Manafior,  Syptpm  Dopnrtnipnt,  Klliott-Fishor  Company. 

^- 
OSCAR  E.  PERRIGO,  M.  E. 

Specialist  in  Industrial  Organization. 

Author  of  "Machine-Shop  Economics  and  Systems,"  etc. 

ANDREW  T.  BIERKAN,  LL.B.,  D.C.L. 

Instructor  in  the  Law   Department,  Yale  University. 


CHAS.  E.  HATHAWAY 

Cost  Expert. 

Chief  Accountant,  Fore  River  Shipbuilding  Co. 


CHAS.  WILBUR  LEIGH,  B.  S. 

Associate  Professor  of  Mathematics,  Armour  Institute  of  Technology. 

^» 
C.  H.  HUNTER- 

Formerly  Advertising  Manager,  Elliott-Fisher  Co. 

V 
CHARLES  R.  BARRETT,  Ph.  B. 

Publicity  Editor,  American  School  of  Correspondence. 

Auttaor  of  "Getting  a  Good  Job"  and  "Business  English  and  Correspondence. 


H.  W.  QUAINTANCE,  LL.  B.,  Ph.  D. 

Head,  Accountancy  and  Business  Administration  Department,  American  School 
of  Correspondence. 

^« 
CHARLES  A.  MILLER,  JR. 

Formerly  Associate  Editor,  American  Technical  Society. 

WILLIAM  SCHUTTE 

Manager  of  Advertising,  National  Cash  Register  Co. 

^« 
WILLIAM  G.  NICHOLS 

General  Manufacturing  Agent  for  the  China  Mfg.  Co.,  The  Webster  Mfg.  Co., 

and  the  Pembroke  Mills. 
Author  of  "Cost  Finding"  and  "Cotton  Mills." 

•»• 
JESSIE  M.  SHEPHERD,  A.  B. 

Head,  Pyblication  Department,  American  Technical  Society. 


Authorities  Consulted 


THE  editors  have  freely  consulted  the  standard  technical  and  busi- 
ness literature  of  America  and  Europe  in  the  preparation  of  these 
volumes.     They  desire  to  express  their  indebtedness,  particularly, 
to  the  following  eminent  authorities,  virhose  well-known  treatises  should  be 
in  the  library  of  everyone  interested  in  modern  business  methods. 

Grateful  acknowledgment  is  made  also  of  the  valuable  service  rendered 
by  the  many  manufacturers  and  specialists  in  office  and  factory  methods, 
whose  cooperation  has  made  it  possible  to  include  in  these  volumes  suit- 
able illustrations  of  the  latest  equipment  for  office  use;  as  well  as  those 
financial,  mercantile,  and  manufacturing  concerns  who  have  supplied 
illustrations  of  offices,  factories,  shops,  and  buildings,  typical  of  the  com- 
mercial and  industrial  life  of  America. 


JOSEPH  HARDCASTLE,  C.  P.  A. 

Formerly   Professor  of  Principles  and   Practice  of  Accounts,   School   of   Com- 
merce, Accounts,  and  Finance,  New  Yorls  University. 
Author  of  "Accounts  of  Executors  and  Testamentary  Trustees." 

^* 
HORACE  LUCIAxX  ARNOLD 

Specialist  in  Factory  Organization  and  Accounting. 

Author  of  "The  Complete  Cost  Keeper,"  and  "Factory  Manager  and  Accountant." 

JOHN  F.  J.  MULHALL,  P.  A. 

Specialist  in  Corporation  Accounts. 

Author  of  "Quasi  Public  Corporation  Accounting  and  Management." 

SHERWIN  CODY 

Advertising  and  Sales  Specialist. 

.\uthor  of  "Flow  to  Do  Business  by  Letter,"  and  "Art  of  Writing  and  Speak- 
ing the  English  Language." 

FREDERICK  TIPSON,  C,  P.  A. 

Author  of  "Theory  of  Accounts." 

^» 
AMOS  K.  FISKE 

Associate  Editor  of  the  \cw  York  Journal  of  Commerce. 
Author  of  "The  Modem  Bank." 

JOSEPH  FRENCH  JOHNSON 

Dean  of  the  New  York  University  School  of  Commerce,  Accounts,  and  Finance. 
Editor,  The  Journal  of  Accountancy. 
Author  of  "Money,  Exchange,  and  Banking." 


Authorities  Consulted— Continued 


M.  U.  OVERLAND 

Of  the  Now  York  Bar. 

Author  of  '•Classitiofl  Corporation  Laws  of  All  the  States." 

*/* 
THOMAS  CONYXGTON 

Of  the  New  York  Bar. 

Author  of  "Corporate  Management,"   "C-  porato  Organization,"  'The  Modern 
Corporation,"  and  "Partnership  Relations." 

^« 

THEOPHILUS   PARSONS,  LL.  D. 

Author  of  "The  Laws  of  Business." 


T.  E.  YOUNG,  B.  A.,  F.  R.  A.  S. 

Ex-President  of  the  Institute  of  Actuaries. 
Member  of  the  Actuary  Society  of  .\m.  ica. 
Author  of  "Insurance." 

^« 
LAWRENCE  R.  DICKSEE,  F.  C.  A. 

Professor  of  Accounting  at  the  University  of  Birmingham. 
Author   of   ".Advanced    .Accounting,"    "Auditing."    "Bookkeeping    for   Company 
Secretary." 

^« 
FRANCIS  W.  PIXLEY 

Author  of  ".Auditors,  Their  Duties  and  Responsibilities,"  and  ".Vccountancy." 

CHARLES  U.  CARPENTER 

General  Manager,  The  Hcrring-Hall-Marvin  Safe  Co. 
Formerly  General  Manager,  Xational  Cash  Register  Co. 
Author  of  "Profit  Making  Management." 

^» 

C.  E.  KNOEPPEL 

Specialist  in  Cost  Analysis  and  Factory  Betterment. 

Author  of  "Systematic  Foundry  Operation  and  Foundry  Costing,"  "Maximum 
Production  through  Organization  and  Supervision,"  and  other  papers. 


HARRINGTON  EMERSON,  MA. 

Consulting  Engineer. 

Director  of  Organization  and  Betterment  Work  on  the  Santa  Fe  System. 

Originator  of  the  Emerson  Efficiency  System. 

Author  of  "Efficiency  as  a  Basis  for  Operation  and  Wages." 

ELMER  H.  BEACH 

Specialist  in  Accounting  Methods. 

Editor,  Beach's  Magazine  of  Business. 

Founder  of  The  Bookkeeper. 

Editor  of  The  American  Business  and  Accounting  Encyclopedia. 


Authorities  Consulted— Continued 


J.  J.  RAHILL,  C.  P.  A. 

Member,  Califonila  Society  of  Public  Accountants. 
Author  of  "Corporation  Accounting  and  Corporation  Law." 

FRANK  BROOKER,  C.  P.  A. 

Ex-Xew  York  State  Examiner  of  Certified  Public  Accountants. 
Ex-Prosident,  American  Association  of  Public  Accountants. 
Author  of  "American  Accountants'  Manual." 


CHARLES  WALDO  HASKINS,  C.  P.  A.,  L.  H.  M. 
Author  of  "Business  Education  and  Accountancy." 

JOHN  J.  CRAWFORD 

Author  of  "Bank  Directors,  Their  Powers,  Duties,  and  Liabilities." 

DR.  F.  A.  CLEVELAND 

Of  the  Wharton  School  of  Finance,  University  of  Pennsylvania. 
Author  of  "Funds  and  Their  Uses." 


CHARLES  BUXTON  GOING 

Managing  Editor  of  The  Enr/ineering  Magazine. 
Associate  in  Mechanical  lOngineering,  Columbia  University. 
Corresponding   Member,   Canadian    Mining   Institute. 
Author  of  "Principles  of  Industrial  Engineering." 

^• 

E.  ST.  ELMO  LEWIS 

Advertising  Manager,  Burroughs  Adding  Machine  Company. 
Formerly  Manager  of  I'ublicity,  National  Cash  Register  Co. 

Author   of   "The   Credit    Man    and    His    Work."    "Financial    Advertising,"    and 
"Getting  the  Most  Out  of  Business." 


CLINTON  E.  WOODS,  M.E. 

Specialist  in  Industrial  Organization. 
Formerly  Comptroller,  Sears,  Roebuck  &  Co. 

Author  of  "Organizing  a  Factory,"  "Unified  Accounthig  Methods,"  and  "Woods' 
Reports." 

^« 

CHARLES  E.  SPRAGUE,  C.  P.  A. 

President  of  the  Union  Dime  Savings  Bank,  New  York. 

Author  of  "The  Accountancy  of  Investment,"  "Extended  Bond  Tables,"  "Phi- 
losophy of  Accounts,"  and  "Problems  and  Studies  in  the  .Vccountancy  of 
Investment." 

WALDO  P.  WARREN 

Author  of  "Thoughts  on  Business." 


Authorities  Consulted — Continued 


L.  B.  MOFPATT 

Director  of  Piorcp  School,  rhlladelphia. 

Author  of  'Mamial  of  Bookkeeping  and  Accounting." 

LEON  CARROLL  MARSHALL 

Dean  of  the  School  of  Commorce  and  Administration,  University  of  Chicago. 
Author  of  •■Readings  in  Industrial  Society." 


LEO  GREENDLINGER,  M.  C.  S. 

Instructor   in    Accountancy    in    School    of   Commerce,    Accounts,    and    Finance, 

New  York  University. 
Editor  of  C.  r.  A.  Quwition  Department  of  the  Journal  of  Accountancy. 
Author  of  "Accounting  Problems." 

^« 
HERBERT  G.  STOCKWELL 

Author  of  "Essential  Elements  of  Business  Character,"  and  "Xet  Worth  and 
the  Balance  Sheet." 

^« 
HUGO  DIEMER,  M.  E. 

Professor  of  Industrial  Engineering,  Pennsylvania  State  College. 
Author  of  "Factory  Organization  and  Control." 

\» 

HARRY  M.  ROWE,  Ph.D. 

Author  of  "Commercial  and  Industrial  Bookkeeping,"  "Business  and  OflSce 
Practice,"  "Business  Bookkeeping  and  Practice,"  and  "Bookkeeping  and 
Accounting." 

^* 
ROY  B.  KESTER,  C.  P.  A. 

Instructor,  School  of  Commerce,  Columbia  University. 

Author  of  "Accounting  Theory  and  Practice,"  and  "Elements  of  Accounting." 

^• 

PAUL  J.  ESQUERRE 

Author  of  "Applied  Theory  of  Accounts,"  and  "Problems  Involving  the  Appli- 
cation of  the  Theory  of  Accounts." 


EDWARD  P.  MOXEY,  JR.,  A.  M.,  Ph.  D.,  C.  P.  A. 

Professor  of  Accounting,  University  of  Pennsylvania. 

Author  of  "Accounting  Systems,"  and  "Principles  of  Factory  Cost  Keeping." 

WALTER  D.  SCOTT,  Ph.D. 

Formerly  Professor  of  Psychology,  Northwestern  University. 
Author   of   "Influencing   Men   in   Business,"   "Increasing   Human   Efficiency   In 
Business,"  and  "The  Psychology  of  Advertising." 

^* 
W.  R.  BASSETT 

Author  of  "When  the  Workman  Helps,"  and  "Accounting  as  an  Aid  to  Busi- 
ness Profits." 


Authorities  Consulted— Continued 


FRED  A.  KRAFFT,  C.  E. 

Assistant  Director,  Labor  Department,  Alfred  Decker  &  Cohn,  Chicago. 
Formerly    Head    Employment    and    Safety    Engineering,    American    School    of 

Correspondence,  Chicago. 
.Vuthor  of  "Sources  of   Labor,"   "Safeguarding  Selection,"   and   "Systems   and 

Policies." 
(See  "Employment  Management  and  Safety  Engineering,"  American  School  of 

Correspondence. ) 

DUDLEY  R.  KENNEDY,  LL.  B. 

Counselor  in  Labor  Employment  and  Industrial  Relations  Problems,  Philadel- 
phia. 

.\uthor  of  "Labor  Turnover,"  "Organization  of  Department,"  and  "Employ- 
ment Management." 

(See  "Employment  Management  and  Safety  Engineering,"  American  School  of 
Correspondence. ) 

WALTER  D.  STEARNS,  E.  E. 

Secretary,  Occupation  and  Rates  Committee,  Westinghouse  Electric  &  Manu- 
facturing Co.,  East  Pittsburgh,  Pa. 
In   Charge  Development  Work  in   Shop,   Westinghouse   Electric  and   Manufac- 
turing Co. 
Author  of   "Job   .Analysis." 

(See  "Employment  Management  and  Safety  Engineering,"  American  School  of 
Correspondence. ) 

^» 
ARTHUR  H.  YOUNG 

Manager   Industrial   Relations,    International   Harvester   Company,   Chicago. 
.Author  of  "The  Employment  Field." 

( See  "Employment  Management  and  Safety  Engineering,"  American  School  of 
Correspondence.) 

^• 

GEORGE  A.  Mcdonald,  B.  S.  in  Economics,  and 

IRVING  D.   ROSSHEIM,  B.  S.   in  Economics,   LL.  D. 

Instructors  in  Wharton  School  of  Finance  and  Commerce,  University  of  Penn- 
sylvania. 
Authors  of  ".V   First  Year  in   Bookkeeping  and  .Vccounting." 

^• 
CHARLES  MCK.  VAN  CLEVE 

Author  of  "Principles  of  Double-Entry  Bookkeeping." 

^* 
CLARENCE  M.  DAY 

Author  of  "Accounting  Practice." 

HENRY  R.  HATFIELD 

Dean  of  the  College  of  Commerce,  University  of  California. 
.\uthor  of  "Modem  Accounting." 

^« 
C.  E.  LADD 

Author  of  "Farm  Bulletin  No.  572,"  United  States  Dept.  of  Agriculture. 


Authorities  Consulted— Continued 


JOHN  W.  SCHULZE 

Author  of  ''rhf  Amorican  OfTico,"  nnd  "Accounting  Practice." 

ST.  CLAIR  V.  Mckenzie 

Author  of  "The  Modem  r.-ilancc  Sheet." 

JOHN  F.  FOWLER 

.\nthor  of  "Export  Houses." 

GEORGE  LISLE 

Author  of  ".\ccounting   in   Theory   nnd    Prnctice,"    and    "Account    Keeping   In 

I'rinciple  and  Practice." 
Editor  of  "Encyclopedia  of  Accounting." 


STIRLING  H.  BUNNELL,  Ph.  B.,  M.  E. 

.\uthor  of  "Cost  Keeping  for  Manufacturing  Plants." 

^• 

ROGER  N.  CARTER 

.\uthor  of  ".\dvanced  .\ccounting." 

LIONEL  C.  CROPPER 

.Author  of  "P.ookkeeping  and  .Vccounting." 

ERNEST  W.  HUFFCUT 

Dean  of  the  Cornell  University  College  of  Law. 
.\uthor  of  "The  Elements  of  Bu.siness  Law." 


HARRY  C.  BENTLEY,  C.  P.  A. 

Fellow  of  the  American  -Association  of  Public  Accountants. 
Author  of  "The  Science  of  .\ccounts,"  and  "Corporate  Finance  and  .Account- 
ing." 

^» 
D.  A.  KEISTER 

.Author  of  "Corporation  .Accounting  and  .Vuditing." 

A.  HAMILTON  CHURCH 

.Author  of  "The  Proper  Distrilmtion   of  Expense  Burden." 

V 
FRANK  E.  WEBNER.  C.  P.  A. 
Author  of  "Factory  Costs." 


Fore^word 


WITH  the  unprecedented  increase  in  our  commer- 
cial activities  lias  come  a  demand  for  better 
business  methods.  Methods  which  were  adequate 
for  the  business  of  a  less  active  commercial  era  have  given 
way  to  more  elaborate  sj'stems  and  countless  labor-saving 
ideas  in  keeping  with  the  financial  and  industrial  progress 
of  the  world. 

C  Out  of  this  progress  has  risen  a  new  literature — the 
literature  of  business.  But  with  the  rapid  advancement  in 
the  science  of  business  its  literature  can  scarcely  be  said  to 
have  kept  pace,  at  least,  not  to  the  same  extent  as  in  other 
sciences  and  professions.  Much  excellent  material  dealing 
with  special  phases  of  business  activity  has  been  prepared, 
but  this  is  so  scattered  that  the  student  desiring  to  acquire 
a  comprehensive  business  library  has  found  himself  con- 
fronted by  serious  difficulties.  He  has  been  obliged,  to  a 
great  extent,  to  make  his  selections  blindly,  resulting  in 
many  duplications  of  material  without  securing  needed  in- 
formation on  important  phases  of  the  subject,  except  at  tho 
sacrifice  of  much  time  and  patience. 

C  In  the  belief  that  a  demand  exists  for  a  library  which 
shall  embrace  the  best  practice  in  all  branches  of  business — 
from  buying  to  selling,  from  simple  bookkeeping  to  the 
administration  of  the  financial  affairs  of  a  great  corpora- 
tion— these  volumes  have  been  prepared.  Prepared  pri- 
marily for  home  study,  the  authors  have  striven  for  sim- 
plicity and  directness  of  style  and  have  used  a  large  num- 
ber of  practical  problems  to  further  illuminate  the  text. 
In  addition  to  the  purely  accounting  and  management 
phases,  the  newly  developed  subject  of  Income  Tax  has 
received  adequate  treatment. 


^  Pltlitors  and  writers  have  been  selected  because  of  their 
familiarity  with,  and  experience  in  handling  various  sub- 
jects pertaining  to  Commerce,  Accountancy,  and  Business 
Administration.  Writers  with  practical  business  experience 
have  received  preference  over  those  with  theoretical  train- 
ing; practicability  has  been  considered  of  greater  impor- 
tance than  literary  excellence. 

C  These  volumes  are  offered  with  the  confident  expectation 
that  they  will  prove  of  great  value  to  the  trained  man  who 
desires  to  become  conversant  with  phases  of  business  prac- 
tice with  which  he  is  unfamiliar,  and  to  those  holding 
advanced  clerical  and  managerial  positions. 


Table    of    Contents 


VOLUME  I 
Business  Organization  and  Control  .  By  James  B.  Griffith^      Page  •!! 

Factors  Influencing  Production — Co-operation — Executive  Organization — 
Charting  Organization — Organization  of  Business — Organization  of  Mer- 
cantile Business — Universal  Application  of  Organization  Principles — De- 
partmental Authorities — General  Manager — Comptroller — Sales  Division — 
Superintendent — Purchasing  Agent — Employment  Department — Duties  De- 
fined— Charting  Salary  and  Wage  Distribution — Expense  Distribution 
Chart — Arrangement  of  Plant — Factory  Plans — OfRce  Plans — Committee 
System — Suggestion   Plan — Order   Blanks 

Factory  Organization  and  Control  .  By  Oscar  E.  Perrigo       Page    69 

Methods  of  Modern  Manufacturing — Organization  of  Manufacturing  Plant 
— Official  Communications — Successful  Management — Shop  Methods  and 
Records — Employment  of  Workmen — Time  Keeping — Time  Cards — Paying 
Employes — Production  Orders — Plant  Orders — Storing  and  Issuing  Stock 
and  Materials 

Advertising  and  Sales  Organization  .  By  James  B.  Griffith       Page  127 

Systems  and  Records — Designs  and  Cuts — Cut  Indexes  and  Tracers — Rec- 
ords of  Printing — Periodical  Advertising — Rate  Cards — Advertising  Con- 
tracts— Checking  Returns — Street  Car  and  Outdoor  Advertising — Sales  De- 
partment— Branches — Mail-Order  Branch — Follow-Up  Systems — Personal 
Salesmanship  Division — Routing  Salesmen — Follow-Up  of  Dealers  and 
Salesmen — Sales  Records 

Credits  and  Collections        .        .        By  James  B.  Griffith       Page  191 

Credit  Man — Information  Required — Financial  Statements — Analysis  of 
Statements — Sources  of  Information — Local  Correspondents — Traveling 
Salesmen — Credit  Agencies — Recording  Credit  Information — Branch  House 
Credits — Collections — Duplicate      Invoices — Monthly      Statements — Install-  1 

ment    Collections — Mail-Order   Collections — Collections    by    Attorneys 

Billing  and  Order  Recording       .        By  George  C.  Russell       Page  245 

European  Methods — Machines  for  Manifolding — Development  of  Billing 
Machines — Loose-Leaf  Sales  Sheets  and  Invoices — Condensed  Billing — 
Duplicate  Invoices — Traffic  Department  Records — Analysis  of  Quantities 
and  Amounts — Unit  Billing — Back  Orders — Split  Orders — Loose-Lcaf 
Sheets — Binders — Designing  Stationery — Styles  of  Type — Carbon  Paper — 
Blinds — How  to  Handle  Orders  on  Billing  Machine — Invoices  in  Blanket 
Form — General  Remarks — Tabulators — Computing  Machines  in  Billing — 
Colored  Sheet  System — Compound  Forms — Retail  Dry  Goods  Billing — De- 
vices of  the  Future 

Shipping  Department      .        .        .        By  James  B.  Griffith       Page  313 

Shipping  Clerk — Class  Rates — Commodity  Rates — Freight  Tariffs — Con- 
densed Rate  File — Routing  Shipments — Filling  Orders — Checking  Ship- 
ments— Export  Shipping — Freight  Claims — Express  Shipments — Retail 
Delivery  System 

Index Page  361 


•For  page  numbers,   sco  foot  of  pages. 

tFor  professional   standing  of  authors,   see  list  of  Authors  and   Collabo- 
rators at  front  of  volume. 


BUSINESS  ORGANIZATION  AND 
CONTROL 


FACTORS  INFLUENCING  PRODUCTION 

1.  Statement  of  Problems.  By  the  term  business  we  under- 
stand any  line  of  activity  in  which  one  busies  himself  or  to  which 
one  devotes  himself.  By  the  terms  business  organization  and  control 
we  understand  that  organization  and  that  control  which  makes  the 
business  efficient  for  the  purposes  of  its  existence,  whether  for  work 
or  play;  for  profit;  or  for  mere  satisfaction  of  having  the  thing 
done  right. 

In  this  article  we  shall  confine  ourselves  to  a  consideration 
of  the  personnel  of  commercial  and  industrial  establishments,  more 
particularly  the  relation  between  employers  and  employes.  What- 
ever the  business — ^whether  large  or  small,  and  whether  meeting  a 
demand  for  necessaries  of  life  or  catering  to  the  whims  and  follies 
of  the  social  set — ^any  business,  if  it  is  to  be  successful  and  perma- 
nent, must  do  two  things:  it  must  meet  the  changing  demands  of 
its  patrons  by  changes  in  the  style  or  character  of  its  output;  and 
it  must  be  above  the  average  in  economical  use  of  the  factors  of 
production. 

Land,  Labor,  and  Capital.  The  factors  of  production  are 
commonly  said  to  be  land,  labor,  and  capital.  If  by  land,  we  mean 
no  more  than  a  place  on  which  to  stand,  that  is,  room  and  oppor- 
tunity; and,  by  capital,  a  certain  control  over  the  land,  material, 
and  instruments  of  production,  the  analysis  may  be  fairly  accept- 
able. But  labor  is  the  factor,  which  standing  in  its  room  and 
place  and  using  the  instruments  which  capital  supplies,  fashions, 
and  combines  and  transports  the  materials  in  such  ways  as 
yield  form  and  time  and  place  utilities — the  real  wealth  of  the 
world. 

2.  Management  vs.  Administration.  The  problem  of  efficient 
production  resolves  itself,  therefore,  other  things  being  equal,  into 
the  question  of  how  to  get  the  most  from  labor.    Two  antagonistic 

11 


2  ORGANIZATION 

theories  are  at  once  presented — management  and  administration. 
By  the  former,  the  laborer  is  the  tool,  or  instrument — an  addi- 
tional hand  only — of  the  capitalist.  Under  such  a  regime,  as 
experience  proves,  the  capitalist  tends  more  and  more,  as  his 
enterprise  prospers,  to  become  not  only  more  independent  but 
also  more  aloof  and  arrogant  and  exacting,  until,  not  infrequently, 
he  looks  upon  the  workers  as  inferiors  with  only  such  rights  as 
he  deems  fit  to  allow.  By  the  latter,  the  laborer  is  a  fellow  worker 
investing  his  capital — strength  and  skill — in  like  manner  and  for 
the  same  purpose  as  the  employer  invests  his  capital — money  and 
time — with  a  view  to  bettering  his  position  through  the  acquisi- 
tion of  an  increased  fund  of  enjoyable  utilities.  It  is  slave  driver 
and  slaves  versus  leader  and  co-worker.  Which  combination  ^vill 
get  the  most  from  labor?  Which  is  the  real  business  method  of 
organization  and  control? 

Results  of  Slave-Driving  Methods.  There  are  still  many  employ- 
ers of  men  who  take  advantage  of  time  study  and  other  scientific 
management  methods  to  increase  production  without  increasing 
wages.  These  men  would  gladly  apply  the  old  slave-driving  methods 
without  limit  if  there  were  no  laws  designed  to  protect  employes 
against  oppression  and  misrule.  Such  men  have  no  concern  for  the 
welfare  of  their  employes,  but  only  for  the  economic  advantage 
to  be  gained  from  their  labor.  Their  point  of  view,  however,  is  one 
sided,  and,  in  the  long  run,  is  destructive  of  their  purpose.  Taking 
an  attitude  of  superiority  toward  their  employes,  such  employers  get 
little  consideration  in  return;  and  each  party  beats  the  other  at 
every  opportunity.  Mutual  distrust  prevails;  the  workmen  cannot 
do  their  best;  and  the  labor  turnover  is  necessarily  high.  Employes 
who  might  be  efficient  and  reliable  workers,  are  in  constant  fear  of 
dismissal,  and  employers  are  in  constant  fear  of  strikes.  Under  such 
conditions  efficiency  in  production  is  impossible.  Taking  industry 
as  a  whole — good  and  bad  methods  of  control  lumped  together — 
the  output  of  the  average  worker  at  the  present  time,  according  to 
good  authority,  "is  not  one-third  of  what  it  should  be  and  can  be 
without  any  increased  tax  on  the  body  or  brain  of  the  operative."* 
And  William  R.  Bassett,  in  his  recent  book,  "When  the  Workman 
Helps,"  maintains  that  the  driving  method  does  not  develop  above 

*  Going:     "Industrial  Engineering,"  page  45. 

12 


ORGANIZATION  3 

fifty  per  cent  of  the  worker's  capacity.  The  product  is  also  inferior 
in  quaUty.  Employes  suffer  loss  of  wages.  Employers  suffer  loss 
of  profit.  Society  suffers  loss  of  consumable  goods,  and,  because  of 
the  restricted  production,  pays  an  unnecessarily  high  price  for  the 
goods  which  it  does  secure. 

Measure  of  Wages.  A  new  order  is  demanded.  Society,  the 
State,  has  a  right  to  require  and  ultimately  will  require  that 
wasteful  and  disturbing  methods  shall  be  abandoned,  and  that 
the  interests  of  society  as  a  whole,  shall  not  be  subject  to  either 
the  interest  or  the  will  of  a  few. 

"The  first  step  in  any  wage  consideration,  and  the  first  step 
toward  the  new  idea  in  business,  is  to  get  the  real  value  on  wages. 
We  all  know  that  cheap  labor  is  not  cheap;  paid  cotton  pickers 
have  proved  cheaper  than  slaves — although  it  took  a  long  time  so 
to  convince  the  South,  because  it  never  reckoned  the  expense 
of  idle  slaves.  In  any  operation  in  which  the  material  costs  are 
high  as  compared  with  the  labor  costs,  the  highest  possible  pay 
is  the  cheapest,  if  it  results  in  a  saving  of  material,  or  in  a  finer 
product,  or  in  both.  In  the  grades  of  production  where  labor  is 
the  big  factor,  then  high  wages  are  economical  if  the  wastes  of 
human  power  can  be  cut  to  a  minimum.  Wages  are  measured 
solely  in  terms  of  production." 

Mutual  Profit  in  Trade.  '^Reason  and  common  sense  are  grow- 
ing more  powerful  year  by  year,  and  the  more  enlightened  common 
sense  becomes,  the  more  it  will  see  that  we  must  let  those  with 
whom  we  deal  prosper,  if  we  are  to  prosper  ourselves."  The  same 
idea  underlies  the  common  saying  that  if  one  is  to  maintain  a 
successful  business  of  any  sort,  he  must  give  his  customers  "their 
money's  worth."  One  successful  manufacturer  even  goes  so  far 
as  to  decline  to  sell  his  products,  except  to  those  who  are  in  posi- 
tion to  use  those  products  with  profit,*  thus  recognizing  the  prin- 
ciple that  to  oversell  a  customer  is  to  make  him  a  dissatisfied 
customer,  and,  therefore,  to  lose  him.  Painfully,  but  no  less  cer- 
tainly, the  commercial  world  has  come  to  a  recognition  of  the 
truth  that  real  prosperity  is  a  product  of  mutual  advantage. 
"Progressive  sellers  make  it  their  business  to  see  that  their  buyers 
make  money  out  of  what  they  buy — they  try  to  make  certain 

*  Schulzc:    "American  OfBce,"  page  114. 

13 


4  ORGANIZATION 

that  tliere  will  be  a  mutuality  of  benefit,  even  if  there  cannot  be 
a  mutuality  of  interest.  " 

JJ'agcs  Measured  hy  Production.  "Wage  methods  have  not 
caught  up  with  merchandising,  and  they  will  not  until  the  old 
ideas  of  master  and  servant  are  abandoned,  and  business  is  con- 
sidered as  democratic,  mutual  enterprise."*  As  the  success  of 
a  trading  business  depends  upon  giving  money's  worth,  so  the 
success  of  any  business,  from  the  standpoint  of  its  dealings  with 
labor,  depends  upon  "making  their  work  pleasant  and  profitable 
to  them." 

Employer  and  Employe  Both  Seek  Gain.  There  is  no  good 
reason  why  the  man  who  offers  service  for  sale  should  not  enjoy 
at  least  as  much  favor  from,  and  be  as  much  under  the  protec- 
tion of,  the  State  as  the  man  w^ho  offers  goods  for  sale.  Yet 
nothing  is  more  apparent  than  that  most  of  the  laws  are  made 
and  administered  with  an  eye,  first  of  all,  to  the  interest  of  the 
capitalist  class.  Measiu'es  directly  in  behalf  of  the  workmen  are 
adopted,  not  from  a  sense  of  justice  and  right,  but  rather  from 
a  recognition  of  the  fact  that  the  demands  of  the  workmen  can 
no  longer  be  ignored.  No  worth  while  workman  wishes  to  con- 
tinue always  a  workman  of  the  same  class.  The  workman  is  a 
human  being  and  like  every  other  normal  man,  desires  to  improve 
his  condition.  His  business  is  no  more  an  end  in  itself  than  is 
that  of  the  man  who  employs  him.  It  is  "a  means  to  an  end — a 
means  for  making  a  livelihood,  a  field  of  wholesome  activity  and 
a  school  for  the  development  of  character  and  mental  vigor." 
Misled  rather  than  helped  by  the  lavish  display  of  wealth  and 
veneer  of  culture  and  refinement  on  the  part  of  those  who  could 
and  should  set  him  a  good  example,  he  frequently  goes  wrong 
and  "spends  his  money  for  that  w^hich  is  not  bread,  and  his  labor 
for  that  which  satisfieth  not."  But  his  purpose  is  right;  and^ 
even  under  existing  unjust  conditions,  he  is  showing  a  greater 
capacity  to  rise  than  his  employers  show  to  keep  from  falhng. 
Nor  are  laborers,  even  of  the  lowest  classes,  opposed  to  the  accu- 
mulation of  wealth.  Nothing  is  more  deeply  rooted  in  their  own 
disposition  than  a  desire  to  enjoy  such  accumulations  for  them- 
selves,  and  if  they  sometimes  seek  to  reduce  all  to  their  own 

♦Basaett  in  "When  the  Workman  Helps,"  page  57. 


14 


ORGANIZATION  5 

level,  it  is  but  the  natural  reaction,  from  a  sense  of  injustice  in 
being  deprived  of  their  rightful  share  in  the  products  of  industry. 

Need  for  Free  Market.  The  seller  of  goods  and  the  seller  of 
service  have  each  a  right  to  the  benefits  of  a  free  market;  but 
there  can  be  no  free  market  where  the  State  favors  one  class  more 
than  the  other  or  where  fraud,  or  misrepresentation,  or  the  taking 
of  undue  advantage  prevail.  Herein  lies  the  gist  of  the  labor 
problem  —  the  nut  which  society  must  crack.  The  man,  who, 
through  faith  in  the  representations  of  a  dealer,  buys  worthless 
mining  stock  as  gilt-edged  security,  cut  glass  for  diamonds,  or  a 
cotton  for  an  all-wool  suit,  is  no  more  defrauded  than  is  the  man 
who  accepts  employment  in  a  factory  or  mine  at  a  stipulated  wage 
rate,  and  then,  as  soon  as  he  has  attained  some  degree  of  skill 
in  his  work  and  is  able  to  earn  a  competence  at  that  particular 
employment,  and,  by  consequence,  is  correspondingly  unfitted  to 
undertake  a  different  line  of  work,  has  his  wage  rate  cut,  because, 
as  the  employer  too  often  puts  it,  "he  is  earning  too  much  money." 
Again,  he  may  be  set  to  work  in  a  dangerous  occupation  without 
adequate  preparatory  instruction.  And  the  man  who  lures  another 
into  a  place  of  danger,  and  then  exacts  an  exorbitant  sum  as  the 
price  of  saving  his  life,  is  no  more  guiky  of  undue  influence  than 
the  capitalist  who  deliberately  misleads  workmen  touching  the 
market  demands  for  labor  and  withholds  productive  operations 
until  the  workmen,  having  exhausted  their  small  store  of  accumu- 
lated wealth,  are  ready  to  accept  a  starvation  rate. 

Effects  of  Improved  Machinery.  The  installing  of  improved 
machinery  is  almost  invariably  in  more  or  less  expectation  that 
thereby  labor  may  be  dispensed  with,  or,  at  least,  that,  by  means 
of  the  machine,  cheap  labor  may  be  substituted  for  the  more 
expensive  labor.  And  time  and  motion  studies  hardly  look  beyond 
increasing  the  effectiveness  of  labor,  and  thereby  enabling  the 
employer  to  pay  higher  wages;  but,  as  in  the  case  of  a  protective 
tariff,  which  enables  the  manufacturer  to  pay  higher  wages,  they 
make  no  provision  that  the  higher  wages  shall  be  paid.  The  logical 
result  is  that  the  lion's  share  of  the  benefit  goes  into  the  pockets 
of  the  employer  class. 

Flat  Wage  Rate.  The  average  workman  prefers  to  do  his  best 
at  any  employment,  and  would  do  so  if  he  could  be  satisfied  that 


15 


6  ORGANIZATION 

his  doin^  so  would  not  be  made  an  occasion  for  cutting  his  wage 
rate  or  of  putting  him  in  some  otlier  way  under  a  handicap  in 
his  elt'orts  to  better  his  condition.  Nor  is  he  predisposed  toward 
a  flat  rate  for  all  employes  in  a  given  occupation,  regardless  of 
work  done.  The  flat  rate  is  not  a  product  of  unionism,  but  the 
means  by  which  employers  have  called  unionism  into  existence. 
Either  because  of  inability  to  determine  the  individual  worth  of 
workers,  or  because  of  indifl'erence  in  their  respective  rights, 
employers  have  chosen  to  buy  labor  in  the  mass  according  to  an 
estimate  of  the  worth  of  the  average  workman.  They  have 
declined  to  do  justice  as  between  the  individual  employes  and 
trade  unionism,  for  under  the  flat  rate  which  workmen  have  been 
therefore  obliged  to  accept  or  fail  of  employment,  the  only  chance 
which  the  efiicient  workman  has  of  securing  an  increase  in  his 
own  wage,  is  by  inducing  his  fellow  workmen  to  unite  in  demands 
for  an  increase  to  all.  "All  too  tardily  employers  are  coming  to 
recognize  that  a  laborer  is  a  "human  being"  and  that  it  is  money 
out  of  pocket  to  consider  labor  as  a  collection  of  individuals  w^ho 
can  be  hired  and  fired,  jumbled  together,  or  otherwise  treated 
much  the  same  as  low-grade,  non-perishable  merchandise." 

Laborers  Are  Citizens.  Not  only  is  the  laborer  a  human 
being  with  a  human  being's  hopes  and  aspirations,  but,  usually 
at  any  rate,  he  is  a  citizen  of  the  country  in  which  he  lives  and 
works — a  member  of  the  same  social  organization  to  which  the 
employer  belongs — and  both  morally  and  legally  entitled  to  rec- 
ognition as  such.  He  resents,  alike,  disdain  and  fraternalism. 
He  does  not  want  to  have  his  affairs  ordered  for  him;  that  is  a 
sacrifice  of  independence,  and  the  result  is  harmful  no  matter  how 
good  an  employer's  intentions  may  be.  There  should  be  no  con- 
fusion of  charity  and  business,  and  there  need  be  none. 

"If  we  take  medical  inspection  and  clean,  safe  shops  as  simply 
good  business,  both  from  the  standpoint  of  compensation  laws  and 
of  production,  they  are  welcomed  by  the  men.  Increased  educa- 
tional facilities  and  the  like  are  also  welcomed,  although  it  is  an 
open  question  whether,  except  for  special  training,  efforts  in  this 
direction  are  not  better  made  with  the  whole  community,  rather 
than  the  company,  in  view.  But  the  'taking  an  interest'  kind 
of  welfare,  the  welfare  work  that  presupposes  that  the  laboring 


16 


ORGANIZATION  7 

man  is  a  fallen  animal  and  should  be  uplifted,  is  everywhere  pro- 
ductive of  more  harm  than  good."* 

CO-OPERATION 

3.  Laborers  and  Capitalists  Are  Associates.  Labor  and  mate- 
rial are  the  two  factors  of  production  with  which  the  employer 
has  immediately  to  do.  They  are  not  alike,  neither  can  they  be 
treated  successfully  as  if  they  were  alike.  Labor  is  not  a  factor 
of  production  in  the  sense  that  it  enters  into  and  forms  a  part  of 
the  finished  product  as  flour,  yeast,  water,  salt,  form  bread,  but 
is  only  the  force  which  combines,  moves,  and  assembles  materials 
as  may  be  desired;  and  the  workman  is  as  truly  a  patron  of  the 
producing  establishment  and  should  have  the  same  interest  in  its 
success  as  the  man  who  buys  its  finished  product.  He  is  in  no 
sense  a  partner  in  the  business.  His  interest  is  rather  that  of  a 
farmer  in  the  mill  which  buys  his  wheat,  or  the  packing  house 
which  buys  his  hogs  and  cattle.  He  knows  that  his  prosperity 
depends  upon  the  prosperity  of  his  employer,  and  employers 
should  know,  and  not  only  should,  but  under  penalty  of  losing  all 
their  holdings,  must  recognize  that  their  own  prosperity  depends 
upon  the  prosperity  of  the  laborer,  and  not  upon  his  degration. 

Limits  of  Management.  The  manager  of  an  establishment 
requiring  labor  and  materials  may  determine  what  commodity  shall 
be  produced  and  in  wh9,t  quantity,  and  may  determine  the  number 
and  character  of  workmen  to  be  employed  in  that  behalf,  but  here, 
with  respect  to  the  workmen,  his  functions  as  manager  must  largely 
cease,  for  workmen  are  not  machines,  however  near  they  may  be 
trained  to  act  like  machines,  and  they  decline  to  be  slaves.  In  his 
subsequent  relations  with  them,  another  type  of  executive  ability  is 
called  for.  As  the  management  has  learned  to  defer  to  the  wants 
of  those  who  take  its  finished  products,  so  it  must  learn  to  defer 
to  the  wants  of  those  who  make  those  products.  This  is  adminis- 
tration— literally  a  ministering  to — and  not  management,  which 
orders  and  directs  and  leaves  no  choice  but  to  obey.  As  Bassett 
says,  "It  is  in  serving  the  worker  and  the  public  that  capital  finds 
its  greatest  amd  most  enduring  profits."  Again,  "and  it  is  becom- 
ing more  and  more  apparent  that  the  owner  must  prove  that  he 

♦  Bassett  in  "When  the  Workmen  Help." 


17 


8  ORGANIZATION 

has  a  right  to  ownership  by  demonstrating  that  men  working  with 
him  are  better  off  than  in  individual  enterprise." 

Service  Is  Real  Ba.sw  of  Profits.  The  t^mployer  must  learn  to 
serve  his  employes  as  he  serves  his  other  patrons.  This  service 
is  not  rendered  by  paying  the  lowest  possible  wage  and,  when  the 
employe  rebels  because  of  the  injustice,  degrading  him  in  his  own 
estimation  by  the  bestowal  of  gifts,  either  in  the  form  of  bonuses 
or  of  so-called  share  of  profits,  but  by  paying  him  in  a  straight- 
forward and  manly  way  the  earnings  which  are  his.  The  giving 
of  a  bonus  or  the  raising  of  wages  after  a  strike  is  begun,  is  indis- 
putable proof  that  the  workmen  have  not  been  paid  what  they 
earned.  "Strikes  never  raise  wages,"  but  they  do  sometimes 
seciu'e  for  the  workmen  what  rightfully  belonged  to  them  and 
what  should  have  been  given  them  before  the  strike  was  called. 
"It  is  only  the  inefficient  manufacturer  who  bewails  the  size  of  his 
pa\Toll.  The  efficient  employer  should  pray  for  wages  so  high  that 
his  less  efficient  competitor  will  go  out  of  business." 

"When  a  man  works  for  himself,  the  only  limit  to  his  remuner- 
ation is  his  ability."  The  wage  earner  is  working  for  himself,  and 
the  only  limit  to  his  rightful  remuneration  is  his  earnings.  No  man 
is  competent  to  set  a  limit  to  wages  until  he  has  demonstrated 
his  ability  to  determine  the  productive  capacity  of  the  workman. 
"Wages  are  high  if  they  do  not  return  value;  they  are  low,  regard- 
less of  their  total  expression  in  dollars,  if  they  do  return  value." 

Workmen  must  be  paid  wages  more  in  proportion  to  their 
contribution  to  product  and  they  must  be  accorded  recognition 
as  members  of  the  social  organization  for  industrial  purposes;  they 
must  have  "more  opportunity  for  self  expression  and  a  wider 
scope  for  creative  energy — in  short,  greater  comfort  and  cultural 
advantages."  And  not  this  only,  but  they  must  be  given  every 
opportunity  for  knowing  and  must  be  assisted  to  know,  especially, 
that  the  wages  paid  them  constitute  a  fair  division  of  the  produce 
of  the  industrial  enterprise. 

Industrial  Undertakings  not  Private  Business.  Mr.  W.  L. 
George,  a  radical  labor  agitator,  is  right  when  he  says:  "It  is  no 
use  settling  strikes  by  tricking  us  ....  Our  increases  must 
come  off  profit."  The  labor  element  will  not  always  submit  to 
being  tricked  and  every  move  of  that  sort  only  delays  the  final 


18 


ORGANIZATION  9 

reckoning.  Anyone  who  undertakes  deliberately  to  fool  a  normally 
intelligent  class  of  workers,  in  the  long  run,  fools  no  one  but  himself. 
Increases  in  wages  "must^come  off  profit."  This  is  not  saying  that 
increases  must  come  out  of  the  earnings  of  capital  alone,  but  out 
of  the  earnings  of  industry  as  a  whole.  The  workmen  want  their 
share.  That  share  can  be  determined  only  from  an  intelligent 
consideration  of  the  amount  of  profit  and  a  full  understanding 
of  the  conditions  under  which  it  is  acquired.  Abundant  instances 
show  that,  even  with  being  constantly  in  close  touch  with  the 
activities  of  their  particular  establishments  and  assisted  by  expert 
help,  employers  frequently  do  not  know  the  profits — do  not  know 
whether  they  are  producing  profits  or  losses.  How,  then,  shall 
the  workmen  know  unless  they  have  at  least  an  equal  opportunity? 
But  shall  the  workmen  have  access  to  "the  books"  and  permis- 
sion to  know  the  inner  workings  of  the  business?  Certainly.  It 
was  so  in  the  days  before  the  era  of  machine  industry  and  was 
good  alike  for  the  employer  and  for  the  employe.  Their  interests 
have  not  changed,  but  the  means  of  intercommunication  have 
been  clogged  and  prejudices  and  antipathies,  born  of  ignorance  of 
each  others  rights  and  needs,  have  been  developed.  Let  the 
workmen  have  their  representatives  on  the  boards  of  directors 
and  subordinate  governing  bodies  and  let  them,  through  agents  of 
their  own  choosing,  investigate  and  learn  the  true  condition  of  the 
business  in  which  they  are  the  associates  of  their  employers. 
And  in  proportion  as  this  is  done,  the  workers  will  acquire  both 
an  active  and  a  real  interest  in  the  business  and  the  danger  of 
strikes  will  disappear.  This  is  not  opening  one's  private  affairs 
to  the  scrutiny  of  unfriendly  eyes.  The  capital  which  one  devotes 
to  business  enterprise  and  for  the  handling  of  which  he  solicits 
the  co-operation  of  any  group  of  workers  is  no  longer  a  private 
but,  as  to  those  associates  at  any  rate,  becomes  a  matter  of  public 
concern.  This  method  of  treating  labor  troubles  is  as  superior  to 
investigations  by  committees  of  arbitration  after  a  strike  or  lockout 
has  begun  as  the  cleaning  up  of  mosquito-breeding  swamps  is  to 
the  doctoring  of  yellow-fever  patients  and  for  the  same  reason, 
namely,  because  it  checks  the  difficulty  at  its  source. 

4.     Looking  Ahead.     Reasons  for  Losses.     But  we  have  been 
assuming  all  the  way  that  industrial  operations  always  yield  a 

19 


10  ORGANIZATION 

profit.  This  is  by  no*"means  true,  and  even  when  true,  it  does 
not  follow  that  the  workman  is  entitled  to  an  increased  wage,  for 
the  unusual  profit  may  be  "due  solely  to  exceptional  managerial 
skill,"  in  which  case,  "it  is  capital  and  not  labor  that  is  entitled 
to  the  reward."  Again,  "the  worker  may,  by  his  lack  of  diligence, 
produce  an  article  the  cost  of  which  is  so  high  that  it  cannot  well 
be  sold  at  a  profit."  Or,  "on  the  other  hand,  the  worker  may 
deliver  to  capital  a  good  article  at  a  fair  price  and  then  capital 
may,  by  stupidity  of  management,  forfeit  the  profit."  Or,  yet 
again  the  productive  scheme  may  be  so  poorly  planned,  or  so 
incompetently  managed;  or  the  article  produced  be  so  little  in 
demand  that  marketing  at  a  profit  is  impossible.  But  such  possi- 
bilities, far  from  doing  away  with  the  need  for  full  understanding 
between  the  employer  and  his  employes,  only  accentuate  its 
necessity. 

Measure  of  Highest  Efficiency.  Every  workman  has,  at  any 
time,  a  certain  capacity  for  productive  work.  That  capacity  can 
be  increased  by  education  and  training;  made  stagnant  by  con- 
tinued application  to  routine  work;  or  utterly  dissipated  through 
idleness  or  profitless  enterprise.  For  every  workman,  too,  there 
is  a  rate  of  work  and  day's  length  which  yields  the  maximum 
return.  A  lower  rate,  or  shorter  day  fails  to  get  the  best  return 
for  that  day;  a  higher  rate  or  longer  day  leads  to  damaged  pro- 
duct and  consequent  loss.  And  what  is  true  in  this  respect  for 
one  day's  work,  is  true  also  for  a  week,  a  month,  a  year,  and  for 
the  span  of  life;  and  the  length  of  day  and  rate  of  work  which 
will  get  the  most  from  labor  varies  with  the  productive  period, 
the  term  of  employment,  and  the  character  of  work  to  be  done. 
One  may  conceivably  do  good  work  in  some  line,  through  twenty- 
four  consecutive  hours;  but,  it  must  be  self  evident  that  he  can- 
not keep  this  up.  For  like  reason,  the  most  effective  working  day 
of  the  man  occupied  in  close  mental  application  is  likely  to  be 
shorter  than  that  of  one  working  with  his  hands.  The  laws  of 
efficiency  and  economy  and  justice  alike  require  that  the  condi- 
tions under  which  men  work  shall  be  conducive  of  the  greatest 
effort  without  harm  to  the  worker;  that  every  worker  shall  do  the 
best  he  can  without  encroaching  upon  his  capacity  for  work;  and 
that  each  worker  shall  be  paid  according  to  results  produced. 

20 


ORGANIZATION  11 

The  tenant  who  takes  a  farm  for  one  year  only,  has  no  interest 
in  its  productiveness  for  another  year,  and,  therefore,  too  often 
encroaches  upon  its  productive  capacity — in  legal  parlance,  com- 
mits waste,  -l  It  is  paying  interest  out  of  principal.  In  like  manner 
employers, '  hiring  men  for  short  periods  only,  regardless  of  the 
future  like  one-year  tenants,  not  infrequently  encroach  upon  the 
productive  capacity  of  their  workmen — commit  waste — and  thus 
despoil  both  the  ,  worker  and  the  State.  This  is  especially  true 
in  the  case  of  women  and  children  employes,  and  the  resulting 
economic  loss  to  the  State  is  many  times  in  excess  of  the  immedi- 
ate profit  to  the  employer.**^  Every  person  has  a  natural  right  and 
duty  to  make  the  most  of  himself  which  his  capacities  will  allow, 
and  it  is  both  the  right  and  the  duty  of  the  State  to  provide  pro- 
tection against  the  stunting  or  destruction  of  that  capacity — in 
other  words,  to  prevent  waste.  If  we  would  become  a  really 
prosperous  people,  we  must  become  an  efficient  people.  To  this 
end,  two  things  are  especially  needful:  organization,  which  affords 
opportunity  for  co-operative  effort  and  consequent  differentiation 
of  function  together  with  high  development  of  skill  and  education 
in  special  lines;  and  effective  administration,  which  so  deals  with 
employes  as  to  get  the  most  and  best  from  labor — considered,  not 
from  the  narrow  viewpoint  of  an  employer's  interest  for  a  day  or 
other  short  period,  but  from  the  viewpoint  of  society  and  the 
workman's  own  best  interest  for  his  life  period. 

Higher  Ideals.  "A  man's  mind  has  two  channels,  one  through 
which  flows  thoughts  connected  with  the  daily  routine  of  living 
and  attending  to  ordinary  affairs  of  life  and  business.  In  the 
other  and  higher  channel  are  thoughts  concerning  the  possibility 
of  greater  usefulness  and  larger  opportunities."  This  double- 
mindedness  is  common  alike  to  the  employer  and  to  the  employe, 
and  before  either  can  work  to  best  advantage  in  the  more  routine 
matters,  some  measure  of  opportunity  must  be  afforded  for  the 
realization  of  the  hopes  and  aspirations  aroused  by  the  higher 
thinking.  This  clearly  means  prosperity  for  the  employes  no  less 
than  for  the  employers.  Their  real  interests  are  reciprocal  and 
neither  can  permanently  prosper  at  the  expense  of  the  other. 

"The  broad-minded  business  man  can  see  that  a  greater  amnunt 
of  profit  can  be  derived  from  intelligently  directed  and   interested 


21 


12  ORGANIZATION 

human  machines,  than  can  be  derived  from  any  system  in  which 
a  group  of  human  beings  is  considered  merely  as  a  mass. 

"The  idea  of  practical  economy  makes  it  necessary  that  there 
should  be  no  waste  in  the  act  of  any  employes.  The  greatest 
possible  amount  of  service  should  be  obtained  from  the  laborer. 
By  putting  him  in  a  position  wherein  he  can  measure  the  value  of 
his  interested  service  in  definite  terms  of  money,  he  will  not  only 
create  a  larger  wage  for  himself,  but  he  will  at  the  same  time  work 
a  corresponding  increase  in  the  revenue  to  the  manufacturer. 
This  is  not  merely  theoretical  sociology;  it  is  practical  business 
economy. 

"Believe  me,  these  essentials  of  business  character  are  pos- 
sessed by  li\ing  men  who  have  demonstrated  that  they  are  work- 
able, practical  principles."* 

EXECUTIVE  ORGANIZATION 

5.  Differentiation  of  Functions.  In  the  following  pages,  we 
present  analyses  of  typical  business  estabhshments,  showing  the 
commonly  recognized  relationship  between  the  different  classes  of 
workers  for  purposes  of  management  and  administrative  control — 
it  is  the  executive  organization.  The  larger  establishments  are 
chosen  not  because  the  functions  and  control  indicated  are  peculiar 
to  large  establishments,  but  because  it  is  only  in  the  larger  estab- 
lishments that  the  several  functions  are  fully  differentiated  and 
clearly  discernible.  Being  thus  separately  set  out,  the  character- 
istic features  can  be  more  readily  recognized  and  studied  and  their 
usefulness  determined.  It  should  be  comparatively  easy,  there- 
after, to  discover  these  features  in  the  smaller  establishments 
with  which  the  student,  presumably,  is  more  acquainted  and  to 
learn  to  introduce  and  to  use  them  as  occasion  may  require. 
But  it  must  be  remembered,  always,  that  an  organization  is  static 
while  administration  which  is  carried  on  through  it, '  is  dynamic 
and  ever  changing.  Administration  is  a  matter  of  intellect,  and 
intellect,  though  it  may  sometimes  be  dormant,  is  never  static 
for  even  when  dormant  it  is  moving  relatively  backward  and  los- 
ing its  hold  on  the  things  that  are  worth  while.  It  is  the  business 
of  the  executive  officer  of  any  establishment,  or  of  any  depart- 

*.Stockwell:    "Essential  Elements  of  Business  Character,"  page  76. 

22 


ORGANIZATION  13 

ment  of  it,  to  learn  the  requirements  of  the  various  positions  to 
which  workers  must  be  assigned;  to  find  the  workers  best  fitted  to 
perform  the  duties  of  such  positions;  and  to  keep  them  loillingly 
at  the  top  notch  of  endeavor.* 

General  Characteristics.  To  reduce  the  subject  to  concrete  form,  the 
important  objects  of  business  organization  may  be  defined  as  follows: 

(A)  To  unite  the  individuals  who  are  to  conduct  an  enterprise  into  a 
body  which  will  work  systematically  to  a  common  end. 

(B)  To  bring  together  or  group  the  component  parts  of  the  body  with 
respect  to  their  specific  relations  and  duties. 

(C)  To    elect    officers    and    appoint    committees    and    authorities    with 
clearly  defined  duties  and  responsibilities. 

These  definitions  all  lead  to  a  common  center,  that  is,  co-opera- 
tion. Without  co-operation  the  success  of  any  organization  is  very 
questionable,  if  not  impossible.  With  it — a  body  of  men  all  working 
together  for  a  common  end — almost  any  apparent  obstacle  will  be 
surmounted.  No  matter  how  large  an  organization  may  be,  how 
many  or  wide  its  ramifications,  if  the  spirit  of  co-operation  prevaUs, 
this  same  spirit  will  have  such  an  effect  upon  the  work  of  the  execu- 
tive, sales,  and  production  department,  that  it  will  move  as  one 
irresistible  body. 

And,  regardless  of  the  size  or  nature  of  a  business  enterprise,  the 
organization,  as  here  used,  resolves  itself  into  certain  easily  distin- 
guished components,  as  follows: 

First:  The  owners,  represented  in  a  corporation  by  the  stockholders  or 
investing  public;  in  a  partnership,  by  the  partners;  in  an  individual  business, 
by  the  proprietor. 

Second:    The  executive  or  managerial  division. 

Third:      The  commercial  or  active  business  division. 

Fourth:     The  manufacturing  or  productive  division. 

These  components  lend  themselves  naturally  to  certain  specific 
subdivisions;  depending,  of  course,  upon  the  size  of  the  organization; 
natural  groups  are  formed  to  insure  efficient  management;  certain 
authorities  are  delegated  to  effect  economical  operation  and  pro- 
duction. 

The  stockholders  (owners)  first  elect  from  among  their  number, 
a  board  of  directors.  This  is  the  initial  step  toward  perfecting  a 
business  organization.     The  directors  represent  the  stockholders, 

*  Stockwell:    "EsHcntial  Elements  of  Business  Character,"  page  14. 

23 


14  ORGANIZATION 

and  the  Interest  of  the  stockholder,  as  such,  becomes  that  of  an  in- 
vestor only.  His  interest  in  the  operation  of  the  business  is  to  be 
looked  after  by  the  directors,  whom  he,  or  a  majority,  has  elected. 

From  this  board  of  directors  is  built  the  framework  of  the  execu- 
tive or  managerial  division.  The  first  act  of  the  directors  is  to  meet 
and  elect  the  usual  executive  oiBBcers:  President,  Vice-President^ 
Secretary,  and  Treasurer.  In  modern  organizations,  it  is  customary 
to  also  elect  or  appoint  an  executive  committee  or  hoard  of  managers. 

This  committee  consists  of  three  or  more  members,  usually 
selected  from  the  officers,  to  which  may  be  added  one  or  more  direc- 
tors who  are  not  officers. 

To  this  committee,  the  board  of  directors  delegates  its  authority 
in  the  actual  conduct  of  the  business.  This  plan  of  electing  an  exec- 
utive committee  is  particularly  desirable  when  the  board  is  a  large 
one,  as  it  concentrates  authority  and  results  in  more  prompt  action 
on  matters  demanding  immediate  attention.  A  large  body  is  un- 
wieldy, a  quorum  cannot  always  be  brought  together  on  short  notice, 
but  a  working  majority  of  a  small  committee  can  be  convened 
promptly. 

The  executive  committee  takes  charge  of  both  the  commercial 
and  manufacturing  divisions.  To  still  further  concentrate  authority, 
it  is  customary  to  appoint  a  General  Manager  who  has  direct  super- 
vision over  the  Immediate  operation  of  both  commercial  and  manu- 
facturing divisions.  He  is  appointed  sometimes  by  the  executive 
committee,  but  more  often  by  the  board  of  directors. 

The  general  manager,  while  occupying  a  position  of  chief  acting 
executive,  acts  with  the  executive  committee  and  is  directly  responsible 
to  the  board  of  directors. 

The  commercial  division  of  a  business  naturally  sub-divides  into 
two  sections:  Accounting,  and  Advertising  and  Sales.  The  first 
thought  of  the  student  might  be  that  accounting  is  given  a  position  of 
too  great  importance,  but  in  the  sense  here  used  it  means  the  records 
of  the  business  of  every  nature,  the  accounts,  the  gathering  and  record- 
ing of  statistics  and  information  of  every  character. 

The  manufacturing  division  di\'ides  into  Purchasing  and  Stores, 
and  Production.  In  a  measure,  the  purchasing  of  goods  is  a  function  of 
the  commercial  division,  but  the  purchasing  of  raw  material  and  sup- 
plies is  properly  under  the  supervision  of  the  manufacturing  division. 

24 


ORGANIZATION  15 

CHARTING  THE  ORGANIZATION 

6.  What  may  be  termed  the  anatomy  of  an  industrial  body, 
is  most  graphically  shown  by  means  of  charts.  Free  use  of  charts 
will  be  made  throughout  these  papers.  With  properly  designed 
charts  the  logical  divisions  of  authority  or  expense  can  be  clearly 
shown. 

Fig.  1  furnishes  a  graphic  illustration  of  the  principal  components 
of  the  organization  under  discussion.  In  the  first  group  we  find  the 
owners  (stockholders)  whose  line  of  communication  with  the  business 
is  through  the  board  of  directors.  Subordinate  to  the  board  of  direc- 
tors are  its  own  executive  officers,  the  executive  committee,  and 
general  manager. 

The  connecting  lines  show  the  executive  committee  to  be  in 
direct  communication  with  the  board  of  directors,  while  the  general 
manager  is  in  direct  communication  with  both  the  executive  com- 
mittee and  the  board  of  directors. 

Under  the  general  manager  are  the  commercial  and  manufac- 
turing divisions,  over  both  of  which  he  has  direct  supervision. 

7.  Working  Authorities  in  Large  Enterprises.  The  next  logical 
step  in  the  development  of  our  organization  is  a  study  of  the  working 
authorities  and  responsibilities  of  the  different  officers  and  their 
assistants.  We  have  seen  that  the  administrative  authority  is  for 
practical  purposes  centered  in  the  general  manager.  It  is  not  to  be 
supposed,  however,  that  in  a  large  industrial  organization  he  will 
personally  supervise  all  of  the  details  of  operation  of  the  commercial 
and  manufacturing  divisions.  His  time  must  not  be  taken  up  with 
details  which  can  be  as  well  handled  by  subordinates.  He  should  be 
free  to  devote  his  time  to  questions  of  policy,  the  providing  of  finances, 
the  consideration  of  new  fields  of  endeavor,  and  the  making  of  the 
more  important  contracts.  His  immediate  assistants  will  be  a 
Comptroller  and  a  Superintendent. 

The  comptroller  fills  a  position  identical  with  that  of  a  business 
manager  or  an  assistant  manager.  His  duties  are  mainly  in  connec- 
tion with  the  commercial  division.  It  is  his  business  to  devise  sys- 
tems of  accounts  and  systems  for  recording  the  activities  of  every 
department,  and  have  reports  compiled,  in  proper  form  for  presenta- 
tion to  the  general  manager.  His  is  a  statistical  department,  filling 
a  place  between  the  general  manager  and  the  subordinate  depart- 

25 


Fig.  1.    Chart  of  a  Corporate  Manufacturing  Enterprise 
26 


ORGANIZATION  17 

merits,  and,  while  not  closing  the  avenues  of  communication  between 
these  departments  and  the  general  manager,  it  is  here  that  reports  and 
records  of  results  are  concentrated. 

The  superintendent  is  in  immediate  charge  of  manufacturing 
operations  and  is  responsible  for  the  custody  of  all  property  used  in 
manufacturing.  His  position  does  not  close  the  avenue  of  communi- 
cation between  factory  departments  and  the  general  manager. 

Fig.  2  illustrates  the  subdivisions  of  the  commercial  and  manu- 
facturing branches.  This  chart  does  not  go  back  of  the  administra- 
tive section  of  the  organization,  as  the  stockholders  have  no  direct 
connection  with  the  actual  operation  of  the  business. 

We  find  the  subdivisions  of  the  commercial  branch  in  charge  of 
the  following:  Chief  Accountant,  with  direct  supervision  over  all 
bookkeeping  and  accounting  records;  Chief  Stenographer,  in  charge 
of  all  stenographic  and  circularizing  work;  Advertising  and  Sales 
Managers,  in  charge  of  publicity  and  selling  campaigns;  Credit  man, 
in  charge  of  credits  and  collections. 

The  manufacturing  department  includes  the  Purchasing  Agent, 
who  purchases  all  manufacturing  stores,  materials,  and  supplies; 
Chief  Stores  clerk,  in  charge  of  the  storage  "of  all  materials  and  sup- 
plies; Chief  Engineer,  who  designs  new  products,  new  machinery 
for  the  manufacture  of  that  product,  and  conducts  all  experimental 
work;  Chief  Draftsman,  who  superintends  the  work  of  the  drafting 
rooms;  Assistant  Superintendent,  in  charge  of  maintenance  of  power 
and  heating  plants,  internal  transportation  facilities,  machinery 
and  buildings;  Foremen,  in  charge  of  shops  employed  in  production 
work. 

As  shown  by  the  lines  of  communication,  represented  by  the 
heavy  lines,  the  authorities  of  the  comptroller  and  superintendent 
extend  to  every  phase  of  the  work  of  the  commercial  and  manufac- 
turing branches.  The  comptroller  is  in  communication  with  the 
manufacturing  branch  since  the  making  of  schedules,  time  keeping, 
and  the  assembling  of  cost  statistics  are  all  centered  in  his  office. 
He  does  not,  however,  assume  any  of  the  duties  of  the  superintendent, 
and  while  their  work  is  closely  related,  the  two  officers  conduct  their 
departments  without  conflict  of  authorities.  It  must  be  remembered 
that  they  are  equally  responsible  to  the  general  manager,  which  of 
itself  requires  cordial  cooperation. 

27 


COMMERCIAL 


CHIEF  ACCOUNTANT 


CHIEF 
STENOGRAPHER 


ADVERTISING  MGR. 


SALES  MGR. 


CREDIT    MAN 


MANUFACTURING 

PURCHASING    AGE>4T 

1 

CHIEF 
STORES   CLERK 

1 

CHIEF    ENGINEER 

1 

CHIEF    DRAFTSMAN 

1 

FOREMEN 

1 

ASSISTANT 
SUPER  INTENDENT 

Fig.  2.    A  Chart  of  Working  Authorities  in  a  Manufacturing  Business 

28 


ORGANIZATION  19 

8.  Organization  Applied  to  Small  Business.  We  have  referred 
only  to  large  manufacturing  enterprises  divided  into  many  depart- 
ments, necessitating  a  division  of  executive  duties  among  a  large 
number  of  minor  executives.  While,  in  the  organization  of  a  smaller 
enterprise,  not  all  of  these  department  heads  will  be  required,  the 
principles  of  organization,  so  far  as  division  of  authority  is  concerned, 
remain  the  same. 

In  the  small  corporation,  we  find  the  same  board  of  directors 
elected  by  the  stockholders.  This  board  may  be  small,  consisting 
of  no  more  than  five,  or  even  three  members,  but  the  same  executive 
oflScers  are  elected.  One  man  may  hold  more  than  one  office,  as  secre- 
tary and  treasurer,  or  vice-president  and  treasurer,  yet  each  office  is 
filled.  If  the  board  is  small  the  executive  committee  may  be  omitted, 
in  which  case  the  board  itself  performs  the  duties  of  the  executive 
committee.  There  is  the  same  general  manager;  at  least  the  duties 
exist  even  though  there  be  no  such  office  in  name.  The  president 
may  act  as  the  executive  head,  and  be  recognized  as  the  actual  mana- 
ger of  the  business,  but  in  so  doing  he  is  acting  in  an  entirely  different 
capacity  than  that  pertaining  to  the  office  of  president. 

Extending  the  illustration  to  a  small  manufacturing  enterprise, 
the  general  manager  may  assume  all  of  the  duties  of  the  comptroller 
in  the  operation  of  the  commercial  branch;  he  may  be  his  own  sales 
manager  or  credit  man;  or  in  the  manufacturing  branch,  he  may  act  as 
superintendent. 

The  treasurer  of  the  corporation  may  be  the  accountant  and 
also  act  as  credit  man.  The  advertising  and  sales  managers  may 
be  one,  or  the  superintendent  may  be  the  purchasing  agent  as  well. 

The  point  intended  to  be  emphasized  is  that  there  are  certain 
duties  to  be  performed,  certain  responsibilities  to  be  met,  certain 
authorities  to  be  assumed  even  though  it  be  but  a  one-man  business. 
And  in  this  is  illustrated  the  importance  of  creating  any  business 
organization  without  regard  to  individuals. 

9.  Organization  of  Mercantile  Business.  Leaving  for  a  time 
the  organization  of  a  manufacturing  enterprise,  we  will  consider  the 
application  of  the  principles  of  organization  to  a  trading  business. 
In  such  a  business,  the  administrative  section  remains  the  same: 
stockholders,  directors,  officers,  executive  committee,  general  manager. 
At  this  point  the  business  naturally  divides  into  the  departments  of 
buying  and  selling. 

29 


21) 


Fig.  3.    A  Chart  of  a  Corporate  Trading  Enterprise 
30 


ORGANIZATION  .        21 

The  buying  department  is  subdivided  into  purchasing,  stock, 
and  shipping.  The  subdivisions  of  the  sales  department  are  sales 
and  accounting.  Our  chart  of  the  organization  shown  in  Fig.  3, 
follows  the  same  lines  as  Fig.  1,  the  only  change  being  in  the  main 
divisions. 

Advancing  the  next  step  we  find  the  executive  officers  in  charge 
of  the  several  divisions  of  the  work,  corresponding  very  closely  to 
those  shown  in  Fig.  2.  The  buying  department  is  in  charge  of  the 
Purchasing  Agent,  Chief  Stock  Clerk,  and  Shipping  Clerk,  or  Traffic 
Manager,  as  he  is  sometimes  known. 

The  selling  department  is  in  charge  of  the  ChieJ  Accountant, 
Advertising  Manager,  Sales  Manager,  and  Credit  Man.  This  is 
shown  clearly  in  the  chart,  Fig.  4. 

Lest  an  erroneous  impression  be  gained,  it  may  be  well  to  state 
at  this  point  that  the  advertising  and  sales  managers  must  work  in 
perfect  harmony.  Indeed,  advertising  is  one  branch  of  the  sales 
department  and  the  success  of  one  is  so  closely  interwoven  with  the 
other  that  no  important  step  should  be  taken  by  either  independently. 

In  many  large  concerns,  the  sales  manager  is  the  real  advertising 
manager,  even  though  another  may  supervise  the  actual  routine  of 
preparing  advertising  matter.  A  competent  advertising  man  makes 
a  successful  sales  manager,  and  every  sales  manager  should  have 
advertising  training,  for  the  purpose  of  advertising  is  to  create  a 
demand  and  assist  in  making  sales. 

Referring  again  to  Fig.  4,  it  is  seen  that  both  buying  and  selling 
departments  are  under  the  control  of  the  general  manager,  from  whom 
direct  lines  of  communication  lead  to  every  division  of  these  depart- 
ments. Direct  communication  is  also  maintained  between  the  two 
departments.  The  accounting  division  keeps  the  accounts  of  the 
baying  department;  the  sales  division  must  be  in  communication 
with  the  purchasing  and  stock  division  in  respect  to  maintaining  the 
stock  to  be  sold,  and  with  the  shipping  division  in  respect  to  the  filling 
of  orders. 

10.  Universal  Application  of  Organization  Principles.  When 
we  go  into  all  of  the  ramifications  of  business  we  find  many  cstablisli- 
ments  where  minor  variations  of  our  plan  of  organization  appear 
necessary,  but  in  the  final  analysis,  the  fundamentals  prove  to  be  the 
same. 

31 


SELLING 


CHIEF  ACCOUNTANT 


ADVERTISING  MGR. 


SALES     MGR. 


CREDIT    MAN 


BUVING 


PURCHASING   AGENT 


CHIEF 
STOCK     CLERK 


SHIPPING    CLERK 


Fig.  4.    Chart  of  Working  Authorities  in  a  Trading  Business 
32 


ORGANIZATION  23 

Reduced  to  its  simplest  form,  we  will  suppose  the  business  under 
consideration  to  be  a  small  retail  establishment  conducted  by  two 
partners.  No  thought  has  been  given  to  the  principles  of  organiza- 
tion, yet  they  are  applied  in  that  little  store  just  as  surely  as  in  the  im- 
mense manufacturing  plant. 

Ask  any  commercial  salesman  calling  on  the  firm  who  is  the  man 
to  see  regarding  the  introduction  of  a  new  line  of  goods,  and  he  will 
probably  answer,  "Mr.  Jones  is  the  man  to  see;  he  does  the  buying." 
With  no  thought  of  organization,  the  owners  of  this  little  business 
realize  that  it  is  best  for  one  man  to  do  the  buying.  Perhaps  the  other 
may  inspect  samples,  his  opinion  may  be  asked,  he  may  even  place  an 
occasional  order,  but  it  is  not  the  rule  of  the  establishment.  By 
placing  the  buying  in  the  hands  of  one  partner,  confusion  is  avoided. 
He  can  keep  in  closer  touch  with  prices,  and  the  results  are  far  more 
satisfactory. 

Advancing  to  the  larger  retail  business  of  the  department  store, 
whether  the  general  store  of  the  small  town  or  the  big  store  of  the 
city,  we  find  a  different  problem.  Here  the  buying  is  further  special- 
ized, for  one  man  buys  for  one,  or  at  most  three  or  four  departments. 
The  same  men  act  as  sales  managers  and  buyers  in  the  departments 
for  which  they  are  responsible.  The  manager  of  a  department  in  a 
big  store  is  selected  as  much  for  his  ability  as  a  buyer  as  for  his  sales- 
manship. But  we  do  not  get  away  from  fundamental  principles, 
for  in  buying  and  selling  the  manager  is  performing  two  entirely 
separate  and  distinct  functions. 

No  matter  what  the  business,  we  find  the  same  two  fundamental 
functions,  that  is,  buying  and  selling.  As  illustrations  of  the  appli- 
cation of  this  principle  to  different  businesses  we  give  the  following: 

Publishers  of  newspapers  and  other  periodicals  buy  editorial  work, 
manuscript,  engraving,  paper,  printing;  sell  subscriptions,  advertising  space. 

Publishers  of  books  buy  editorial  work,  manuscript,  engraving,  paper, 
printing;  sell  books. 

Railroad  companies  buy  equipment,  rails,  lumber,  coal,  supplies,  labor; 
sell  freight  and  passenger  transportation. 

Schools  and  colleges  buy  textbooks,  supplies,  services  of  instructors; 
sell  instruction. 

Professional  men  buy  their  instruction,  books,  instruments,  office  furnish- 
ings, clerical  assistance;  sell  their  services. 

In  every  undertaking,  revenues  are  produced  through  salesman- 
ship.    Every  business  and  every  profession  has  something  to  selK 

33 


24  ORGANIZATION 

and  its  financial  success  depends  largely  upon  the  quality  of  sales- 
manship employed.  Whether  it  be  a  professional  man  with  nothing 
but  his  services  to  sell  and  no  other  means  of  advertising  than  through 
work  well  done,  or  a  gigantic  commercial  organization  with  its  exten- 
sive advertising  campaign  and  many  salesmen,  a  selling  organization 
exists  in  some  form.  And  before  anything  can  be  sold  it  must  be 
procured,  or  bought. 

On  this  question  of  the  universal  application  of  the  principles 
of  organization,  we  quote  from  a  valuable  contribution  in  The  Engi- 
neering Magazine,  by  C.  E.  Knoeppel: 

"  While  business  as  it  is  now  conducted  is  not  as  simple  as  it  was  in  the 
barter  days,  it  must  not  be  inferred  that  this  segregation  of  authority  is  syn- 
onymous with  complexity,  for  its  very  purpose  has  been  to  simplify,  and  that 
is  what  it  has  accomplished.  It  is  only  where  this  segregation  has  been  the 
result  of  lack  of  thought  and  proper  attention,  or  other  like  causes,  that  we 
find  a  complex  and  unsatisfactory  condition  of  affairs.  In  fact,  there  is  all 
about  us  sufficient  evidence  that  many  commercial  enterprises  are  being  con- 
ducted along  lines  that,  as  far  as  evolutional  development  is  concerned,  are 
several  stages  behind  the  times 

"Let  us  suppose  a  case,  which  will  apply  in  a  greater  or  less  degree  to 
the  majority.  In  the  earlier  development,  we  will  say  that  the  founder  of 
the  business  was  able,  on  account  of  its  small  size,  to  make  what  sketches  he 
needed,  solicit  orders,  see  that  they  were  filled,  perhaps  take  a  hand  at  the 
making  if  occasion  required,  see  to  the  shipments,  and  attend  to  the  collections 
and  the  keeping  of  his  few  accounts.  He  finds  that  the  business  grows,  and 
eventually  places  a  man  in  charge  of  certain  branches  while  he  looks  after 
others.  The  accounts  eventually  require  more  attention  than  he  can  give 
them  so  he  engages  a  bookkeeper  in  order  that  he  may  be  relieved  of  the  work. 
He  finds  that  the  quantity  of  materials  received  and  shipped  amount  to  enough 
to  warrant  a  receiving  clerk  as  well  as  a  shipping  clerk,  and,  to  handle  this 
material  from  its  inception  to  shipment  he  conceives  the  idea  of  placing  a  man 
in  charge  as  stock  clerk.  He  then  adds  a  purchasing  agent,  in  order  that  he 
may  be  relieved  of  the  detail  and  that  purchases  may  be  made  most  economi- 
cally; a  man  is  placed  in  charge  of  the  orders;  foremen  are  placed  in  charge 
of  certain  men  in  the  shops;  the  details  connected  with  making  plans,  draw- 
ings, estimates,  etc.,  are  taken  over  by  a  practical  man;  his  manager  is  given 
a  man  to  look  after  the  shops  or  engineering  branch;  while  the  commercial 
branch  with  its  many  details  is  placed  in  the  hands  of  another.  As  the  evolu- 
tion continues,  the  selling  branch  is  assumed  by  one  man;  cost  details  are 
looked  after  by  another;  a  chief  inspector  is  added  in  order  that  all  work 
may  be  shipped  according  to  specifications;  the  engineer,  who  before  had 
been  a  sort  of  jack  of  all  trades,  is  placed  in  charge  of  certain  work,  while  an 
electrician  is  engaged  to  look  after  this  particular  work;  and  so  this  segrega- 
tion continues  as  the  development  continues. 

"  Perhaps  it  is  not  to  be  wondered  at  that  the  founder,  in  looking  back- 
ward, is  inclined  to  pat  himself  on  the  back  when,  in  a  reminiscent  mood,  he 

34 


ORGANIZATION  25 

considers  what  he  terms  'remarkable  development.'  He  considers  that  he  has 
been  wonderfully  successful  in  building  up  a  business  which  at  the  beginning 
was  so  small  as  to  admit  of  his  supervising  every  detail,  while  today  he  em- 
ploys a  dozen  men  to  do  the  work  he  once  did.  There  is  no  getting  away  from 
the  fact  that  it  is  this  same  feeling  of  self-satisfaction  that  is  responsible  for  a 
large  number  of  faulty  organizations,  for  if  we  should  tell  this  manufacturer 
that  his  business  is  far  from  being  as  successful  as  it  is  possible  for  it  to  be  .  .  . 
he  would  vigorously  resent  any  such  accusation;  but  the  fact  remains  that  it  is 
not  the  success  it  should  be,  for  the  very  reason  that  the  development  has  been 
allowed  practically  to  take  care  of  itself.  New  men  were  added,  new  offices 
created,  only  when  absolutely  necessary,  each  newcomer  being  given  a  general 
idea  of  what  was  expected  of  him,  and  not  knowing,  not  thinking,  or  perhaps 
not  having  the  time  to  give  more  than  passing  attention  to  the  matter,  the 
proprietor  did  not  consider  the  fact  that  his  business  was  a  unit,  with  each 
worker  a  part,  having  a  distinct  relation  with  every  other  worker.  Hence,  as 
the  efficiency  of  any  organization  is  directly  in  proportion  to  the  care  with 
which  these  relations  are  considered  and  treated,  his  organization  naturally 
fails  to  attain  that  degree  of  eflBciency  obtainable,  and  for  this  condition  he, 
and  he  only  is  responsible." 

11.  Departmental  Authorities.  The  next  logical  step  in  the 
development  of  our  organization  is  an  analysis  of  the  departmental 
organizations.  We  have  seen  how  the  operations  of  the  business  are 
divided  among  several  divisions  or  departments.  The  reason 
for  such  divisions  is  apparent.  In  a  large  business  no  one 
man  can  personally  supervise  all  of  its  activities.  Each  division 
is  engaged  in  certain  activities  that  demand  the  immediate 
supervision  of  specialists.  One  man  is  a  specialist  in  advertising, 
another  in  sales  plans,  others  in  purchasing,  specific  manufacturing 
operations,  or  the  design  and  maintenance  of  appliances  intended 
to  improve  the  product  or  to  reduce  costs. 

To  reach  the  highest  state  of  efficiency  in  every  department  of 
the  business,  these  specialists  must  be  employed,  which  is  another 
reason  for  organizing  a  business  along  the  line  of  its  activities,  and 
without  respect  to  individuals. 

Before  we  can  decide  what  manner  of  man  should  be  placed  at 
the  head  of  this  or  that  department,  we  must  study  the  duties  of  the 
position,  the  responsibilities  involved,  the  authorities  to  be  assumed. 
To  present  this  problem  in  graphic  form,  the  chart  (Fig.  5)  is  de- 
signed. While  the  arrangement  is  not  inconsistent  with  Fig.  2,  this 
chart  of  the  same  class  of  organization  is  laid  out  along  the  lines  of 
authority.  It  shows  both  the  authority  of  the  department  head  and 
the  necessary  activities  of  his  division. 


35 


20 


ORGANIZATION 


We  have  selected  the  organization  of  a  hirge  industrial  establish- 
ment for  tlie  very  reason  that  many  divisions  and  departments  are 
necessary.  The  smaller  organization  will  have  a  less  number  of 
divisions,  but  it  is  much  easier  to  condense  than  to  expand  a  given 
plan.  Any  man  who  understands  the  requirements  of  a  large  organ- 
ization can  readily  adapt  those  ideas  to  a  smaller  establishment.     He 


Fig.  6.    A  Chart  Which  Shows  the  Duties,  Responsibilities  and  Authorities  to  be 
Assumed  by  Each  Department  Head 


can  apply  the  plan  so  far  as  it  can  be  used  to  advantage.  Some 
variations  of  the  application  of  the  plan  will  be  pointed  out  in  our 
departmental  analysis. 

It  is  perhaps  unnecessary  to  say  that  while  the  authorities  of 
some  of  the  department  heads  have  been  referred  to  m  preceding 


36 


ORGANIZATION  27 

pages,  this  analysis  is  intended  to  exhibit  these  authorities  in  greater 
detaiL 

12.  General  Manager.  As  a  rule  the  general  manager  has 
general  supervision  over  the  commercial  and  manufacturing  branches. 
In  conjunction  with  the  president  and  executive  committee,  he  formu- 
lates all  policies  to  be  followed  in  purchasing,  manufacturing,  sales, 
and  advertising,  establishing  credits,  and  accounting  methods.  He 
is  responsible  to  the  executive  committee  and  board  of  directors  for 
procuring  materials,  their  manufacture  and  sale,  and  the  maintenance 
of  buildings  and  machinery. 

It  is  his  duty  to  keep  in  touch  with  the  operations  of  every  de- 
partment and  to  post  himself  on  the  general  efficiency  of  all  classes 
of  workmen.  Through  reports  he  will  keep  informed  in  regard  to 
the  results  of  the  operations  of  every  department. 

While  in  direct  communication  with  all  department  and  division 
heads,  he  will  have  for  his  immediate  assistants,  a  comptroller  and  a 
superintendent.  It  is  from  the  comptroller  that  he  will  receive 
statistics  and  reports  of  the  activities  of  the  business  in  all  its  branches, 
while  to  the  superintendent  he  delegates  his  authority  in  the  actual 
operation  of  the  manufacturing  branch. 

13.  Comptroller.  "A  controller  or  manager"  is  a  standard 
definition  of  the  term  comptroller.  In  the  organization  under  con- 
sideration, he  is  a  controller  of  the  business  by  virtue  of  the  fact  that 
he  is  responsible  for  the  accounting  and  recording  of  all  activities  of 
the  business. 

He  occupies  the  position  of  auditor  and  is  the  real  systematizer 
of  the  business.  He  creates  all  systems  of  commercial  accounting,  cost 
accounting,  departmental  records,  time  keeping,  and  pay  rolls,  reports 
of  superintendent,  perpetual  inventory,  sales  statistics,  and,  in  fact,  all 
records  of  the  business.  He  prepares  all  balance  sheets,  comparative 
statements,  trading,  manufacturing,  and  profit  and  loss  statements,  and 
reports  to  the  general  manager  or  executive  committee,  or  both,  on 
the  condition  of  finances,  materials,  and  finished  goods. 

Since  the  formation  of  important  policies  may  hinge  on  the 
reports  and  statistics  of  his  department,  he  occupies  an  office  next 
in  importance  to  the  general  manager.  The  training  and  experience 
gained  in  his  office  place  him  in  direct  line  for  promotion  to  the  office  of 
general  manager. 

37 


28  ORGANIZATION 

His  authority  is  absolute  over  the  accounting  and  stenographic 
departments,  while  his  authority  extends  to  other  departments  only 
in  respect  to  their  record  systems.  In  the  accounting  department, 
his  direct  assistant  is  the  chief  accountant;  and  in  the  stenographic, 
the  chief  stenographer. 

In  a  smaller  organization  the  comptroller  may  not  require  the 
ser  ices  of  a  chief  accountant,  in  which  case  he  performs  the  duties 
of  the  position.  Or  the  treasurer  may  occupy  the  oflfice  of  comp- 
troller. 

Chiej  Accountant.  The  chief  accountant  is  in  immediate  charge 
of  the  commercial  and  factory  accounting.  His  assistants  are  cashier, 
bookkeepers,  factory  accountant,  cost  clerks,  time  clerks. 

This  department  accounts  for  the  receipt  and  disbursement  of  all 
moneys  and  properties,  figures  costs  and  pay  rolls,  and  prepares 
statistics  necessary  for  the  use  of  the  comptroller  in  making  up  his 
reports  and  statements. 

It  is  evident  from  this  that  the  comptroller  is  in  a  sense  the  custo- 
dian of  all  property  belonging  to  the  business,  since  he  must,  through 
his  accounting  department,  account  for  its  receipt  and  disbursement. 
This  explains  why  the  comptroller  prescribes  all  systems  for  the  care 
and  recording  of  stores,  supplies,  and  finished  product. 

Chiej  Stenographer.  The  chief  stenographer  is  at  the  head  of  the 
correspondence  department,  with  authority  over  all  stenographers, 
typists,  filing  and  mailing  clerks. 

Stenographers  are  supplied  to  all  divisions  by  this  department. 
This  plan  of  having  all  stenographers  in  one  department  subject  to 
the  call  of  those  having  need  of  their  services  is  now  adopted  by  most 
large  concerns,  except  in  a  few  cases  where  stenographers  act  as  private 
secretaries  to  the  officers.  The  plan  is  an  economical  one,  for  only 
the  number  actually  required  to  handle  the  work  of  the  establishment 
need  be  employed.  Under  the  old  plan  of  employing  one  or  more 
stenographers  in  each  department,  it  is  common  to  find  them  idle  in 
one  department  while  in  another  the  work  is  behind.  Another 
strong  point  in  favor  of  the  more  modern  plan  is  that  each  stenog- 
rapher becomes  familiar  with  the  dictation  of  all  departments,  and 
no  stenographer  has  an  opportunity  to  become  familiar  with  the 
secrets  of  the  business. 

In  the  stenographic  department,  the  work  of  addressing  and 
mailing  for^  letters,  catalogues,  and  circulars  is  done. 

38 


ORGANIZATION  29 

All  correspondence  is  filed  by  this  department. 

Records  of  office  supplies,  stationery  and  printed  matter  are 
maintained  in  this  department. 

The  chief  stenographer  has  charge  of  and  accounts  for  all  postage, 
but  secures  postage  by  requisition  from  the  cashier  or  accountant. 

14.  Sales  Division.  By  far  the  most  important  division  of  the 
entire  commercial  branch  is  the  sales  division.  This  division  is 
responsible  for  finding  a  market  for  the  output  of  the  business. 

It  must  create  a  demand  for  the  product  through  advertising, 
open  new  fields,  study  the  demands  of  the  trade  and  the  products  of 
competitors,  ascertain  as  far  as  may  be  the  possibilities  of  marketing 
new  products,  and,  above  all,  sell  goods  at  a  profit. 

The  selling  division  of  some  of  the  largest  industrial  establish- 
ments is  in  sole  charge  of  a  general  sales  manager,  who  has  authority 
over  the  advertising  as  well  as  selling.  In  our  chart  we  have  divided 
responsibility  for  the  conduct  of  this  division  between  sales  and  ad- 
vertising managers,  placing  the  advertising  manager  on  an  equality 
with,  rather  than  subordinate  to,  the  sales  manager.  This  combina- 
tion will  produce  the  most  satisfactory  results  for  most  enterprises. 

Advertising  Manager.  The  advertising  manager  has  charge  of 
the  preparation  of  all  advertising  literature,  catalogues,  copy  and 
designs  for  all  periodical  advertising  and  usually  the  placing  of  all 
contracts  for  printing  and  engraving. 

He  has  authority  over  all  artists  and  copy  writers  employed 
regularly  and  for  special  work. 

With  the  sales  manager  and  general  manager,  he  makes  up 
appropriations  for  periodical  advertising  and  places  contracts  when 
these  appropriations  have  been  approved. 

He  confers  with  the  sales  manager  on  all  questions  pertaining 
to  his  work,  no  printed  matter  for  the  use  of  the  selling  division  being 
ordered  until  approved  by  the  sales  manager.  Thus,  cooperation 
of  the  sort  that  makes  for  success  is  assured. 

Sales  Manager.  The  sales  manager  has  authority  over  the  sale 
of  goods  and  filling  of  orders,  and  his  department  is  divided  into 
selling  and  filling.  The  selling  department  is  further  subdivided 
into  salesmen  and  mail  orders. 

One  subdivision  represents  that  portion  of  the  sales  made  by 
personal  salesmen.  The  active  work  is  carried  on  by  salesmen  who 
call  on  the  trade  under  the  orders  of  the  sales  manager. 

39 


;H)  organization 

The  sales  manager  hires  all  salesmen,  prescribes  their  territories 
and  routes,  and  supervises  their  expense  accounts. 

He  compiles  reports  and  statistics  of  their  work  for  presentation 
to  the  comptroller  or  general  manager,  and  keeps  the  records  pre- 
scribed for  this  department. 

The  mail  order  division  is  engaged  in  the  sale  of  goods  by  the 
use  of  letters,  circulars,  and  catalogues.  Lists  of  customers  and 
prospective  customers  are  maintained,  and  sales  follow-up  systems 
are  operated  under  the  immediate  supervision  of  this  division. 

In  the  billing  department,  the  chief  order  clerk  is  in  charge  of 
entering  sales  orders,  making  shipping  orders  and  manufacturing 
orders.  He  maintains  a  record  of  sales  and  manufacturing  orders 
so  that  he  can  keep  informed  on  manufacturing  or  stock  requirements. 
All  invoicing  of  shipments  is  done  in  this  department. 

The  shipping  clerk  maintains  records  of  rates  of  transportation 
by  rail,  water,  or  truck,  and  keeps  posted  on  routes  and  facilities. 
He  supervises  the  packing  of  all  goods,  and  secures  proper  receipts 
from  transportation  lines. 

Credit  Man.  The  position  of  the  credit  man  is  an  important  one 
in  any  establishment. 

He  collects  and  records  information  about  the  financial  responsi- 
bility and  credit  standing  of  customers.  A\Tien  necessary,  he  makes 
special  investigations,  and  on  the  basis  of  his  information  extends  or 
limits  credit.  Every  order  from  a  new  customer  must  be  approved 
by  the  credit  man  before  it  can  be  accepted. 

^^^len  accounts  have  been  opened,  it  is  the  duty  of  the  credit  man 
to  collect  them  when  due,  or,  if  not  paid  promptly,  to  use  every  means 
to  secure  a  settlement.  His  work  brings  him  in  contact  with  both 
the  sales  and  accounting  departments. 

The  credit  man  is  assisted  by  such  clerks  and  collectors  as  may 
be  necessary  for  the  conduct  of  his  department. 

15.  Superintendent.  The  superintendent  is  given  general  super- 
vision over  the  manufacturing  branch  of  the  business.  His  author- 
ity extends  directly  to  the  engineering  and  drafting  departments,  the 
work  of  the  assistant  superintendent,  foreman  of  tool  room,  and  shop 
foremen.  His  relations  with  the  purchasing  department  are  advisory 
rather  than  managerial. 

His  immediate  assistants  are  the  chief  engineer,  assistant  superin- 
tendent, and  shop  foremen. 

40 


ORGANIZATION  31 

It  is  his  duty  to  execute  orders  for  the  manufacture  of  goods, 
operate  the  plant  in  the  most  economical  manner,  study  and  intro- 
duce processes  and  methods  that  tend  to  reduce  manufacturing  costs, 
and  keep  informed  generally  on  the  eflBciency  of  men,  machinery, 
appliances,  and  materials  in  all  manufacturing  departments. 

With  the  assistance  of  the  purchasing  agent  he  provides  all 
materials  and  supplies  required  in  the  manufacture  of  goods  or  for 
the  operation  of  the  plant. 

Chiej  Engineer.  The  chief  engineer  designs  all  special  ma- 
chinery and  appliances  to  be  manufactured  for  use  in  the  plant, 
designs  and  plans  all  new  products  for  which  there  appears  to  be  a 
demand,  and  personally  supervises  the  experimental  department. 
The  installation  of  new  equipment  is  also  done  under  his  supervision. 

His  authority  extends  to  the  drafting  department  which  is  in 
charge  of  a  chief  draftsman.  This  department  draws  all  designs, 
plans  of  new  machinery  or  product,  and  all  plans  not  classed  as 
architectural. 

In  a  plant  where  many  special  tools  are  made,  the  chief  engineer 
also  has  authority  over  the  tool  room. 

Assistant  Superintendent.  The  assistant  superintendent  is  re- 
sponsible for  the  maintenance  in  efficient  condition  of  all  power, 
pumping,  heating,  and  lighting  plants,  internal  transportation  facili- 
ties, and  the  repair  of  buildings  and  equipment. 

Except  in  the  larger  plants,  he  has  authority  over  the  tool  room 
which  is  placed  in  charge  of  a  tool  room  foreman.  This  department 
is  responsible  for  the  custody  of  all  tools,  repairs  to  tools,  and  their 
manufacture.  Tools  are  issued  only  on  requisition  and  perpetual 
inventories  are  maintained  according  to  systems  prescribed. 

In  some  very  large  industrial  plants,  like  a  steel  plant,  there  are 
several  assistant  superintendents,  each  having  specific  duties.  There 
may  be  a  superintendent  of  power,  superintendent  of  transportation, 
superintendent  of  machinery,  superintendent  of  buildings,  superin- 
tendent of  stores,  etc.  In  a  small  plant,  the  superintendent  will 
personally  perform  the  duties  here  assigned  to  the  assistant  superin- 
tendent. 

Shop  Foremen.  As  the  name  indicates,  the  shop  foremen  are  in 
charge  of  the  various  shops  or  manufacturing  departments.  It  is 
the  duty  of  the  shop  foreman  to  lay  out  the  work  called  for  by  the 

41 


32  ORGANIZATION 

orders  of  the  superintendent,  and  to  assign  the  work  to  his  men.  He 
will  make  provision  for  the  prompt  execution  of  orders  by  making 
requisition  for  the  number  of  men  that  can  be  profitably  employed  in 
his  department.    It  is  his  duty  to  keep  all  of  his  men  supplied  with  work. 

16.  Purchasing  Agent.  The  purchasing  agent  has  charge  of 
the  purchase  of  all  materials  for  the  manufacturing  branch,  and  in 
some  cases  for  the  commercial  branch.  In  a  purely  trading  concern, 
his  duties  would  be  in  connection  with  the  commercial  or  selling 
branch,  but  in  a  large  industrial  enterprise,  the  purchase  of  office 
supplies,  advertising  literature,  etc.,  is  usually  under  the  supervision 
of  the  comptroller,  chief  accountant  or  advertising  manager. 

He  procures  catalogues,  price  lists,  names  of  manufacturers 
and  dealers,  and  keeps  generally  informed  as  to  sources  of  supply. 
He  obtains  samples  which  are  submitted  to  tests  by  the  engineering 
department  or  otherwise. 

With  the  superintendent  and  general  manager,  he  makes  schedules 
of  materials,  secures  bids,  and  places  orders.  Records  of  orders  and 
all  information  needed  in  his  office  are  kept  according  to  the  systems 
prescribed  by  the  comptroller. 

He  has  full  authority  over  the  store  rooms,  in  which  he  is  assisted 
by  the  chief  stores  clerk.  This  department  receives  all  goods,  checks 
receipts  with  orders  or  invoices,  stores  the  goods,  delivers  them  on 
properly  executed  requisitions,  and  maintains  perpetual  inventory 
records  as  prescribed. 

EMPLOYMENT  DEPARTMENT 

17.  A  department,  or  rather  a  sub-department,  not  shown  on 
the  chart  but  found  in  some  establishments,  is  the  employment 
department.  This  department  is  very  properly  in  immediate  charge 
of  the  superintendent,  and,  in  the  average  manufacturing  plant,  he 
will  hire  all  men.  In  a  plant  employing  a  great  number  of  men,  it 
is  impossible  for  the  superintendent  to  personally  take  charge  of  this 
work,  and  an  employment  agent  is  placed  in  charge. 

The  employment  agent  keeps  records  of  all  employes  and  appli- 
cants and  hires  all  men  needed  by  the  different  foremen. 

GENERAL   MODIFICATIONS 

18.  The  organization  that  we  have  described  is  a  representative 
illustration  of  the  application  of  the  principles  to  a  large  enterprise, 

42 


ORGANIZATION  33 

necessitating  a  considerable  number  of  subdivisions.  But  even  here 
the  charts  show  only  what  may  be  termed  the  principal  divisions ;  the 
charts  might  be  extended  in  greater  detail.  The  explanation  might 
include  the  exact  duties  of  every  employe  in  each  department,  but, 
as  our  purpose  is  to  present  general  principles  in  sufficient  detail  to 
serve  as  a  guide,  explanations  of  these  minute  details  have  been 
omitted. 

There  are,  however,  modifications  to  be  found  in  certain  cases 
which  may  be  made  clear  by  further  suggestions.  We  have  referred 
to  the  comptroller,  and  while  in  many  concerns  no  such  office  is  recog- 
nized, at  least  by  that  title,  some  man  in  every  business  of  any  magni- 
tude fills  an  analogous  position. 

Most  frequently  it  is  the  auditor,  or  if  the  office  of  auditor  has 
not  been  created,  it  may  be  the  treasurer.  Again,  the  duties  or  a 
greater  part  of  them,  may  fall  on  the  office  manager  or  the  chief 
accountant.  Even  in  a  small  partnership  where  one  of  the  partners 
is  the  bookkeeper,  the  duties  exist,  and  are  performed  by  that  partner 
who  keeps  the  accounts.  It  must  be  remembered  that  the  comp- 
troller's office  is  primarily  statistical.  It  matters  not  whether  the 
statistical  operations  involve  the  keeping  of  a  simple  set  of  books 
or  require  large  commercial  and  factory  accounting  forces  with  a 
third  division  to  compile  statistics  from  their  records,  every  business 
demands  certain  statistical  work.  Neither  is  it  important  whether 
the  man  in  charge  of  this  work  be  called  comptroller,  auditor,  ac- 
countant or  office  manager,  but  we  have  used  the  title  of  comptroller 
as  more  exactly  descriptive  of  the  functions  of  the  office  when  carried 
to  its  legitimate  conclusion  in  a  large  business. 

While,  in  most  manufacturing  industries,  the  superintendent  and 
purchasing  agent  have  full  authority  in  the  making  of  purchases  for 
the  manufacturing  branch,  it  has  been  found  advisable  in  some  cases 
to  give  the  comptroller  authority  over  the  purchasing  department. 
A  reason  for  this  is  the  importance  of  reducing  the  investment  in  raw 
material,  supplies,  etc.,  to  the  lowest  point  consistent  with  the  actual 
requirements  of  the  business.  Much  needless  capital  is  tied  up  in 
raw  material,  when  it  might  be  at  least  earning  bank  interest.  His 
chief  concern  being  to  provide  a  liberal  supply  of  raw  materials,  the 
superintendent  is  very  liable  to  overstep  the  bounds  in  the  direction 
of  too  liberal  purchases. 

43 


34  ORGANIZATION 

A  still  different  condition  is  found  in  a  large  merchandising 
establishment.  Here  practically  every  department  manager  is  his 
own  buyer  and  while  he  must  be  regarded  as  the  best  judge  of  what  to 
buy,  it  becomes  necessary  to  supervise  his  purchases  in  respect  to 
quantities.  The  comptroller  should,  therefore,  have  authority  over 
the  amounts  invested  by  the  several  buyers  This  is  usually  con- 
trolled by  giving  the  buyer  a  stated  appropriation  at  the  beginning 
of  each  season,  the  amount  being  determined  by  a  study  of  present 
conditions  and  records  of  past  performance.  The  making  of  an 
appropriation  does  not  operate  against  special  appropriations  to  be 
used  in  taking  advantage  of  specially  advantageous  market  conditions, 
or  to  increase  stocks  of  fast  selling  lines. 

DUTIES  CLEARLY  DEFINED 

19.  One  of  the  first  requirements  in  the  development  of  a  suc- 
cessful organization  is  that  the  duties  of  every  employe  be  clearly 
defined,  and  that  each  employe  be  fully  informed  as  to  his  duties. 
Nothing  tends  to  produce  greater  friction  than  an  overlapping  of 
duties  and  authorities. 

In  a  manufacturing  plant,  when  a  foreman  is  placed  in  charge 
of  a  shop  he  should  be  instructed  as  to  his  authority,  responsibilities, 
and  exact  duties.  \Vhen  these  authorities  have  once  been  established, 
no  other  man  of  equal  or  lower  grade  in  the  organization  should  be 
permitted  to  interfere  in  any  way,  nor  should  the  foreman  be  per- 
mitted to  overstep  his  authority. 

Those  occupying  positions  to  which  greater  authorities  are 
attached  should  also  be  careful  to  not  presume  upon  their  authority 
by  attempting  to  direct  work  properly  under  control  of  the  foreman. 
The  superintendent  or  manager  who,  in  passing  through  a  plant,  dis- 
covers a  workman  in  the  act  of  violating  an  established  rule,  or  doing 
something  dangerous  to  the  lives  of  himself  and  fellow  employes,  or 
performing  work  in  the  wrong  way,  is  justified  in  at  once  bringing 
the  matter  to  the  notice  of  that  workman;  but  he  should  report  the 
occurrence  to  the  foreman  at  the  first  opportunity. 

On  the  contrary,  if  the  manager  or  superintendent  wishes  to 
make  a  change  in  policy  involving  a  departure  from  the  established 
customs  of  the  shop,  or  if  he  requires  the  services  of  a  workman  even 
temporarily  in  another  department,  he  should  first  take  up  the  matter 
with  the  shop  foreman. 

44 


ORGANIZATION  35 

The  same  policy  in  general  should  be  observed  throughout  the 
organization.  The  person  placed  at  the  head  of  a  department  or 
division  of  the  work  should  have  full  authority  and  be  held  responsible 
for  the  work  of  all  employes  in  that  department.  Complaints  of  ineffi- 
ciency of  an  individual  employe  should  be  made  to  the  department 
head.  If  the  purchasing  agent,  for  instance,  finds  the  work  of  a  cer- 
tain stenographer  unsatisfactory,  his  complaint  should  be  made  to 
the  chief  stenographer. 

20.  Duties  of  Individual  Workmen.  The  duties  of  the  in- 
dividual workman  in  the  shop  should  be  as  clearly  defined  as  are  those 
of  his  foreman.  It  is  the  duty  of  the  foreman  to  lay  out  the  work  and 
to  keep  the  workman  regularly  employed  on  the  work  assigned  to 
him. 

In  the  operation  of  the  manufacturing  branch,  the  most  impor- 
tant consideration  is  economy  of  production.  When  a  workman  is 
kept  at  one  task  he  becomes  a  specialist,  increases  his  production,  and 
reduces  costs. 

21.  Duties  of  Office  Employes.  Each  clerk  in  the  office  should 
have  his  work  clearly  defined.  If  specialization  is  profitable  in  the 
shop,  it  is  equally  so  in  the  office.  Every  man  who  has  been  responsi- 
ble for  the  management  of  an  office  will  agree  with  us  that  in  no  other 
branch  of  business  is  there  a  greater  tendency  to  allow  work  to  get 
behind. 

Lack  of  system  is  mainly  responsible  for  this  state  of  affairs. 
While  his  duties  may  be  more  or  less  clearly  defined,  the  work  of  the 
average  office  clerk  does  not  follow  any  well  defined  plan.  He  does 
the  thing  that  seems  most  important,  leaving  the  less  important  tasks 
until  he  "has  time."  Instead  of  surveying  the  field  and  laying  out  a 
logical,  systematic  plan,  the  average  office  employe  goes  about  his 
work  in  a  haphazard  sort  of  way  following  the  line  of  least  resistance. 

The  work  in  every  office  is  largely  routine,  but  the  faithful  per- 
formance of  routine  tasks  is  a  necessary  accompaniment  to  those 
larger  tasks,  which  in  themselves,  appear  of  greater  importance. 
Routine  tasks  are  drudgery — something  that  every  man  seeks  to 
escape.  In  freeing  himself  from  a  state  of  drudgery,  the  department 
head  should  be  careful  lest  he  place  his  subordinates  in  the  same 
dreaded  rut.  An  office  clerk  should  be  given  an  opportunity  to  learn 
all  of  the  routine  of  the  division  in  which  he  is  employed.     He  will 

45 


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GENERAL     ACCOUNTtNG 


GCNCRAL. 


POSTING 


CASH  BALANCES 
&  PAVNEKfTS 


COLLECTIONS 


LEDGER 


D 


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LLm 


O 
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DAILY 


CCBBBBCBBBBBB 


MON. 


WED. 


TMUR 


SAT. 


B  B 


APR. 


A«<A«HIC« 


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C- CLERKS 


Pig.  6.    A  Working  Cbart  'for  the  Qaidaaee  of  tbe  Employes  in  One  Department 

46 


ORGANIZATION  37 

become  a  more  valuable  employe;  while  adding  variety,  the  perform- 
ance of  more  than  one  task  is  training  him  for  a  more  advanced  position. 

To  properly  systematize  the  routine,  the  department  head  should 
first  study  his  department  to  find  out  what  the  routine  tasks  really 
are — what  work  must  be  done  each  day  or  each  week.  He  should 
then  list  these  tasks  and  assign  them  to  certain  clerks  to  be  performed 
at  certain  stated  times. 

This  can  be  best  presented  by  means  of  a  chart  as  shown  in  Fig.  6. 
This  chart  covers  the  work  of  a  typical  general  accounting  depart- 
ment. At  the  top,  the  general  or  routine  tasks  are  listed,  grouped 
under  proper  divisions.  From  each  task  listed  a  line  is  extended  to 
the  time  when  it  is  to  be  performed :  daily,  the  day  of  the  week,  day 
of  the  month,  or  the  month.  The  letters  at  the  end  of  the  lines  indi- 
cate by  whom  the  tasks  are  to  be  performed,  C  representing  clerks,  B, 
bookkeepers,  and  A,  cashier. 

Taking  the  collection  division  as  an  illustration,  we  will  suppose 
that  it  is  Monday,  the  2nd  of  the  month.  The  chart  shows  that  on 
Monday  notices  of  notes  and  accounts  due  are  to  be  mailed.  On  the 
second  day  of  the  month,  past  due  accounts  must  be  taken  up  and  dis- 
posed of.  In  addition  are  the  daily  tasks  as  indicated  by  the  lines 
extending  to  the  daily  line. 

When  a  task  is  to  be  performed  two  or  three  times  in  a  month, 
the  line  is  broken  and  the  letter  inserted  at  each  break.  Even  the 
time  of  drawing  off  a  balance  sheet,  once  every  three  months,  is 
indicated.  A  similar  chart  should  be  made  to  show  the  routine 
duties  of  each  department. 

Such  charts,  supplying,  as  they  do,  complete  working  schedules 
for  the  routine  of  each  department,  soon  reduce  the  time  taken  by 
routine  tasks,  which  is  of  no  little  importance  in  the  conduct  of  a 
well  regulated  department.  They  fill  a  place  in  office  routine  anal- 
ogous to  that  of  the  working  plan  in  the  shop.  The  same  idea  can 
be  carried  out,  and  will  prove  equally  valuable,  even  in  an  office 
where  the  bookkeeper  does  all  of  the  work. 

CHARTING  SALARY  AND  WAGE  DISTRIBUTION 

22.  We  have  seen  how  authorities,  responsibilities  and  even 
routine  duties  are  most  graphically  represented  by  means  of  charts — 
the  working  plans  of  the  recording  divisions  of  the  business.    For 

^  O  G  S"  S 

47 


38  ORGANTZATION 

purposes  of  record,  the  distribution  of  the  expenditures  for  salaries 
and  wages  of  tliose  who  make  up  our  organization  is  of  equal  im- 
portance to  tlie  definition  of  the  authorities  and  duties. 

If  the  accounts  are  to  be  of  value  they  must  be  correct,  and  they 
cannot  be  correct  unless  every  item  is  charged  to  the  proper  account. 
The  value  of  correct  accounts  is  recognized.  They  do  more  than 
show  what  we  have  received  or  the  expenditures  for  a  specific  purpose 
during  a  stated  period;  they  show  when  and  why  an  expense  is  in- 
creased or  decreased.  With  such  information  to  point  the  way  to 
economies  in  the  future,  instead  of  records  that  show  us  merely  the 
amount  of  an  expense  already  incurred,  accounting  takes  its  rightful 
place  as  one  of  the  most  important  functions  of  a  business  enterprise. 

Probably  more  businesses  have  failed  owing  to  the  lack  of  proper 
accounting  methods  than  from  any  one  other  cause.  Many  a  busi- 
ness has  been  rejuvenated — turned  from  failure  to  success — by  the 
introduction  of  a  system  of  accounts  that  truthfully  portrays  its  activi- 
ties. Few  business  failures  are  the  result  of  a  failure  to  buy  goods  at 
right  prices,  or  to  establish  selling  prices  that  show  a  profit.  The 
more  usual  cause  is  found  in  leaks  in  the  expense  account.  Any 
method  that  locates  the  leaks  places  us  in  position  to  stop  them. 

The  chief  value  of  accounting  records  lies  in  the  opportunity 
afforded  for  comparison.  The  fact  that  a  certain  expense  amounted 
to  S900.00  last  month  furnishes  no  information  of  special  value;  but 
when  compared  with  the  amount  expended  for  the  same  purpose 
two,  three  and  four  months  ago  (if  these  expenses  are  analyzed  and 
compared  with  production  or  sales  or  whatever  factor  would  affect 
the  amount)  the  figures  assume  an  important  significance.  But  if 
expenditures  are  erroneously  applied,  if  an  amount  has  crept  into  an 
expense  account  that  does  not  belong  there,  the  comparison  had  better 
not  have  been  made.  Thus  is  seen  the  necessity  of  an  absolutely 
accurate  distribution. 

Here  the  chart — the  working  plan — is  again  applied  to  excellent 
advantage.  The  chart.  Fig.  7,  applied  to  salary  and  wage  distri- 
bution, shows  to  which  of  the  two  principal  divisions  each  item 
should  be  charged.  This  is  the  important  question — to  properly 
apply  expenses  to  the  commercial  and  manufacturing  branches. 
Subdivisions  of  such  a  chart  segregating  expenses  of  each  division 
are  easily  made. 

48 


ORGANIZATION 


i9 


40                     EXPENSE 

DISTRIBUTION 

CHART 

Corrrmei^lal 

DEPT.  AND 
CHV.   HEADS 

CLERKS    1 

STENO- 
GRAPHERS 

EXPE^aSE     1      TOTAL 

EXECUTIVE 

.General   Mgr. 

Comptroller 

TotM 

ACCOUNTING 

Chief   Account  i>nt 

C&.shier 

Billing 

TotM 

OFFICE   EXPENSE 

Chief  Stenogri.Vier 

Mailing 

Filing 

Tbfs>.l 

SALES  EXPENSE 

Advertising  Mgr. 

Copy 

Engrzwvtng 

Printing 

Adverttewg  9pi>.ce 

Sikles  Mgr. 

Siwleamen    Ro^d 

"            M^il  Order 

"             House 

Traveling    Expense 

Postikge 

Order  Recording 

Packing  &  Shipping 

Toti^l 

CRECMTS  »  COLLECTIONS 

1 

Credit  M£.n 

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Reports 

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COMMERCIAL  EXPENSE 

^b«*tsra' 

Fig.  8.    This  Chart  ot  Expense  Distribution  Shows  the  Amount  of  Kxecutive  and  Ad- 


EXPeNSE  DISTRIBUTION   CHART- continueo 

41 

f   Manufacturing        |g^ 

T.    AND 
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.— -■                     II 

1 

ttlnlstrative  Salaries,  and  Kxpenso  of  Ever>  Class,  and  Their  Correct  ApportlonmenI 

61 


42  ORGANIZATION 

The  application  of  the  items  from  which  lines  lead  only  to  the 
commercial  or  manufacturing  branch  is  readily  understood.  Between 
the  two  are  several  items  from  which  lines  lead  to  both  branches, 
indicating  that  the  expense  is  to  be  divided.  This  division  should 
be  given  close  study.  Care  must  be  used  that  too  large  a  part  of  any 
item  is  not  applied  to  either  branch.  The  salary  of  the  general 
manager,  and  usually  the  comptroller,  will  be  equally  divided.  The 
duties  of  the  chief  accountant,  chief  stenographer  and  stenographers 
being  chiefly  in  connection  with  the  commercial  branch,  only  a  small 
portion  of  their  salaries  is  charged  to  manufacturing.  Shipping 
clerk  and  packers*  salaries  are  charged  to  either  one  or  the  other 
branch,  depending  upon  the  nature  of  the  enterprise.  In  a  manu- 
facturing enterprise  where  all  goods  are  delivered  to  stock  rooms 
ready  for  shipment,  packing  and  shipping  is  a  sales  expense  and  is 
charged  to  the  commercial  branch;  in  a  plant  building  heavy  ma- 
chinery that  must  be  shipped  from  the  assembling  floor,  this  expense 
is  usually  charged  to  manufacturing. 

EXPENSE  DISTRIBUTION  CHART 

23.  To  present  a  graphic  record  of  expense  distribution,  the 
chart,  Fig.  8,  is  used.  This  chart  separates  commercial  and  manu- 
facturing expense,  showing  amounts,  while  Fig.  7  shows  to  which 
branch  each  item  belongs. 

This  chart  subdivides  commercial  expense  into  executive,  ac- 
counting, office,  sales,  and  credits  and  collections,  showing  totals  for 
each  and  for  the  entire  commercial  branch.  Manufacturing  expense  is 
subdivided  into  executive,  accounting,  purchasing,  engineering,  and 
shops  and  equipment. 

A  comparison  of  these  statements  from  month  to  month  will 
show  just  what  every  item  is  and  indicate  the  slightest  increase  in 
any  class  of  expense.  Similar  charts  can  be  readily  prepared  for 
any  business,  segregating  expenditures  of  each  branch,  division,  or 
department. 

The  distribution  will  naturally  vary  in  difiPerent  businesses  and, 
before  this  chart  can  be  prepared,  the  exact  distribution  must  be  de- 
termined. In  this  chart,  packing  and  shipping  is  included  as  a  com- 
mercial expense,  while,  as  stated  previously,  in  some  businesses  it 
would  be  a  manufacturing  expense.  All  such  questions  must  be 
decided  before  the  chart  is  prepared. 

52 


ORGANIZATION  43 

EFFECT  OF  PHYSICAL  ARRANGEMENT 

24.  However  eflficient  the  personal  organization,  satisfactory 
results  can  be  obtained  only  under  proper  environment.  It  is  not 
merely  a  question  of  pleasant  surroundings  for  employes,  but  a  finan- 
cial proposition;  not  a  reform  or  a  fad,  but  a  money-making  plan 
that  governs  the  engineer  in  laying  out  a  plant. 

This  is  not  to  be  a  discussion  of  welfare  work,  about  which  much 
has  been  published.  Our  purpose  is  to  point  out  the  business  economy 
of  a  proper  physical  arrangement  of  oflBce,  store  or  factory  as  against 
the  wasteful  methods  of  a  systemless  grouping  of  men  and  machinery. 

The  question  of  physical  environment  is  a  practical  one  that  has 
been  solved  by  many  enterprising  concerns,  and  the  subject  is  de- 
serving of  careful  study  by  the  student  of  business  organization. 
While  some  hard-headed  business  men  may  regard  the  question  of 
minor  importance,  it  is  significant  that  the  largest  and  most  successful 
enterprises,  financially,  are  those  in  which  employes  have  been  sup- 
plied with  the  most  comforts,  surrounded  with  approved  safeguards, 
and  aided  in  their  work  by  the  latest  appliances  of  proved  worth. 

There  is  an  old  axiom  to  the  effect  that  even  a  good  workman 
cannot  be  expected  to  do  good  work  with  poor  tools.  It  is  equally 
true  that  he  cannot  be  expected  to  do  good  work  in  either  unsanitary 
or  inconveniently  arranged  shops  and  offices. 

25.  Factory  Plans.  The  planning  of  a  manufacturing  plant  is 
a  question  for  the  engineer,  rather  than  the  accountant  or  business 
organizer,  but  a  few  general  remarks  on  the  subject  will  not  be  out  of 
place  in  this  paper. 

It  may  be  stated  as  a  fundamental  principle  that  the  factory 
should  be  planned  to  facilitate  the  movement  of  raw  material  from  one 
department  to  another.  In  the  ideal  factory,  storage  for  raw  material 
will  be  provided  where  it  can  be  economically  received  and  easily 
procured  when  needed  in  the  factory.  It  should,  if  possible,  be 
close  to  the  department  in  which  the  material  is  subjected  to  the  first 
operation. 

The  shops  themselves  should  be  arranged  to  facilitate  the  move- 
ment of  partly  completed  parts  from  one  department  or  shop  to 
another.  To  illustrate,  a  foundry  should  be  so  located  that  castings 
can  be  taken  direct  to  the  machine  shop,  or  smith  shop,  not  through 
another  shop  or  in  a  round-about  way. 

53 


44  ORGANIZATION 

Likewise,  the  machine  shop,  if  the  process  be  continuous,  should 
be  located  next  to  the  assembling  department.  Or,  if  a  "parts"  store- 
room is  maintained,  it  should  be  located  between  the  machine  shop 
and  assembling  department.  Storage  for  completed  goods  should 
be  adjacent  to  the  assembling  department,  and  convenient  to  the 
shipping  room  or  platform. 

The  chart,  Fig.  9,  shows  a  typical  layout  of  a  manufacturing 
plant  operating  both  a  foundry  and  wood  shop.  Naturally  the 
foundry  and  wood  shop  are  as  widely  separated  as  possible.  Storage 
of  foundry  materials  is  provided  for  just  outside  of  the  foundry,  while 
lumber  is  convenient  to  the  wood  shop. 

The  arrows  indicate  the  movement  of  raw  materials  through  the 
shops  to  the  finished  goods  store-room,  and  from  thence  to  the  shipping 
platform.  If  these  lines  are  traced  it  will  be  seen  that  at  no  point  is 
the  material  twice  moved  over  the  same  ground.  Each  move  takes 
it  to  the  next  operation  and  one  step  nearer  completion.  IMiere 
materials  and  parts  enter  a  shop  at  two  or  more  points,  the  lines  are 
merged,  show^ing  that  these  materials  leave  that  shop  as  one  piece, 
part,  or  finished  article.  A  feature  underlying  the  whole  plan  is 
economy  in  the  movement  of  work  in  process.  All  work  moves 
through  a  shop,  not  back  and  forth  in  the  shop. 

The  ideal  conditions  do  not  always  exist,  neither  can  they  be 
brought  about  in  every  case.  Many  plants,  built  in  the  past,  have 
been  planned  without  due  regard  for  these  matters;  their  importance 
was  not  appreciated  and  the  buildings  are  so  located  that  it  is  impos- 
sible to  secure  entirely  satisfactory  results.  However,  if  present 
conditions  are  studied  carefully,  many  improvements  can  be  brought 
about  at  slight  expense.  ^Miile,  as  we  have  intimated,  this  is  a  prob- 
lem for  engineers,  a  number  of  cases  might  be  cited  where  the  account- 
ant, called  in  to  systematize  the  accounting  methods  of  a  manufac- 
turing business,  has  suggested  physical  changes  in  the  shops  that  have 
resulted  in  marked  reductions  in  costs. 

26.  Planning  the  Office.  The  average  oflBce  is  arranged  in  a 
very  haphazard  way.  Departments  are  located  with  little  regard  for 
their  departmental  relations;  desks  are  placed  where  they  fit  best 
rather  than  according  to  any  preconceived  plan. 

Logical  arrangement  of  the  office  has  as  great  an  influence  on 
the  economical  conduct  of  the  work  as  does  the  physical  arrangement 

54 


45 


46  ORGANIZATION 

of  the  shop.  The  most  important  requisite  in  the  layout  of  an  oflBce 
is  good  Hght.  While  ideal  conditions  are  impossible  to  attain  in  some 
buildings  used  for  offices,  much  ain  be  accomplished  by  placing  the 
desks  to  take  full  advantage  of  the  light  that  is  available. 

The  writer  once  visited  an  office  in  which  sixty  or  more  people 
were  employed  in  one  big  room.  Most  of  the  light  came  from  the 
rear  and  practically  all  of  the  desks  faced  the  light,  which  is  recognized 
as  most  injurious  to  eyesight.  The  manager  of  the  office  was  asked 
why  the  desks  were  not  placed  in  proper  position,  and  he  replied  that 
they  were  placed  so  that  the  employes  would  sit  with  their  backs  to 
the  entrance,  and  not  have  their  attention  detracted  from  the  work 
by  visitors.  He  considered  this  an  important  move,  but  overlooked 
the  more  vital  fact  that  his  employes  were  not  only  ruining  their  eye- 
sight but  were  actually  doing  less  work  than  would  have  been  done 
under  more  favorable  conditions. 

A  change  was  consented  to.  As  many  of  the  desks  as  possible 
were  so  placed  that  the  worker  would  receive  the  light  from  the  left; 
some  received  it  from  the  right  and  a  few  from  the  back.  Three 
months  later  this  manager  readily  admitted  that  his  employes  were 
turning  out  at  least  one-third  more  work,  and  their  general  health 
was  greatly  improved. 

The  location  of  the  departments  and  the  private  offices  should 
be  carefully  considered.  Departments  in  which  the  work  is  of  a 
nature  requiring  frequent  inter-communication  should  be  located 
as  closely  together  as  possible.  For  instance,  the  sales  department 
should  not  be  placed  between  the  order  and  accounting  departments, 
but  the  order  department  should  be  close  to  the  accounting  depart- 
ment, with  which  it  is  in  constant  communication. 

The  workers  in  a  department  should  be  placed  to  facilitate  the 
movement  of  their  work  from  one  desk  to  another.  Heads  of  depart- 
ments or  chief  clerks  should  be  within  easy  reach  of  all  employes  in 
the  department,  and  accessible  to  the  executive. 

Offices  of  executives  should  be  located  with  reference  to  their 
duties.  The  sales  manager  and  purchasing  agent  should  be  acces- 
sible to  the  public.  The  general  manager  should  be  within  easy 
reach  of  other  officers  but  not  necessarily  accessible   to  the  public. 

The  importance  of  conveniently  arranged  offices  is  receiving 
much  serious  thought,  and  many  of  the  larger  industrial  enterprises 

56 


ORGANIZATION  47 

are  erecting  ideal  administration  buildings.  In  all  specially  planned 
buildings,  the  tendency  is  toward  large  rooms,  rather  than  smaller 
rooms  separating  the  departments.  A  large  room  insures  better 
light  and  air,  and  space  can  be  utilized  to  much  better  advantage. 

Fig.  10  is  a  sketch  of  the  first  floor  plan  of  the  administration 
building  of  one  of  the  large  industrial  enterprises.  This  is,  in  many 
respects,  an  ideal  arrangement. 

A  noticeable  feature  is  the  location  of  the  filing  department 
in  the  center  of  the  main  room.  Here  it  is  easily  reached  by  all 
departments. 

At  either  side  of  the  filing  department  are  the  sales  and  accounting 
departments.  In  the  sales  department  several  sales  managers'  desks 
will  be  noted,  with  desks  for  their  assistants  across  a  narrow  aisle. 
It  happens  that,  in  this  particular  business,  sales  are  divided  into  de- 
partments corresponding  with  the  classes  of  goods  manufactured, 
with  a  sales  manager  for  each  department. 

The  accounting,  order,  and  credit  departments  are  conveniently 
arranged,  and  the  auditor  is  located  where  he  can  overlook  the  entire 
office.  Executive  offices,  across  the  front  of  the  building,  are  access- 
ible to  the  public  and  those  in  the  general  offices. 

27.  Store  Plans.  The  subject  of  store  plans  is  one  of  utmost 
importance  to  the  merchant.  His  success  is  influenced  to  a  great 
extent  by  the  first  impression  received  by  the  prospective  customer. 
If  that  impression  is  favorable,  if  he  is  greeted  by  an  orderly,  well 
arranged  store,  if  his  comfort  and  convenience  have  been  considered, 
the  customer  will  return  and  give  to  the  store  at  least  a  part  of  his , 
patronage. 

The  old-fashioned  general  store,  in  which  all  sorts  of  merchandise 
was  sold,  offered  little  to  commend  in  respect  to  orderly  arrangement. 
As  a  rule,  the  goods  were  jumbled  together  in  a  confused  mass  with  no 
thought  of  segregating  them  in  departments.  Yet  this  country  store, 
found  in  every  hamlet,  was  the  forerunner  of  the  department  store  of 
today. 

The  advent  of  the  department  store  was  a  case  of  adapting  the 
merchandising  methods  of  the  country  village  to  the  needs  of  the  city. 
A  miscellaneous  stock  of  merchandise,  greater  in  size  but  similar  in 
character  to  the  country  store  stock,  was  gathered  in  one  big  store  and 
subdivided  into  departments.     To  compete  with  one-line  stores, 

57 


IS 


ORGANIZATION 


58 


ORGANIZATION  49 

stocks  must  be  equal  in  volume,  which  meant  that  the  department 
store  must  carry  as  large  a  stock  of  clothing  or  of  shoes  as  the  exclusive 
clothing  and  shoe  stores.  The  stocks  must  be  as  complete  and  as 
well  displayed;  each  department  must  be  a  fully  stocked  store,  pre- 
pared to  meet  the  usual  demands  of  a  store  of  that  character. 

The  department  store  of  today  is  a  model  of  systematic  arrange- 
ment. Not  only  are  the  goods  grouped  in  departments,  but  the  de- 
partments are  logically  grouped  and  located  to  suit  the  convenience 
of  the  customers.  If  one  wishes  to  buy  house  furnishings,  hardware, 
or  dishes,  he  will  probably  find  them  in  adjoining  departments. 

But  the  departmental  idea  is  by  no  means  confined  to  the  recog- 
nized department  store;  it  is  a  feature  of  every  well  regulated  store 
dealing  in  exclusive  lines.  Stocks  of  shoes,  hardware,  clothing,  and 
furnishings  are  all  divided  and  the  classes  segregated  by  departments. 

The  departments  themselves  are  subdivided.  Goods  are  classi- 
fied, and  each  class  placed  in  special  compartments.  Goods  most 
frequently  called  for  are  near  at  hand  on  shelves  where  they  can  be 
easily  reached.  Top  shelves,  space  under  counters,  and  other  inac- 
cessible corners  are  reserved  for  goods  called  for  less  frequently. 

THE  COMMITTEE  SYSTEM 

28.  We  have  already  referred  to  the  necessity  of  cooperation  in 
every  successful  organization.  We  do  not  wish  to  be  understood  as 
advancing  this  idea  of  cooperation  for  the  benefit  only  of  executive 
officers  and  heads  of  departments.  It  must  extend  farther  than  this — 
it  must  penetrate  to  every  nook  and  corner  of  the  shop. 

We  must  have  the  cooperation  of  every  workman,  no  matter 
how  obscure  his  position,  and  to  secure  this  cooperation  it  is  neces- 
sary to  instill  in  him  an  interest  in  the  welfare  of  the  business  as  a 
whole.  Treat  him  as  a  mere  cog  in  the  wheel  and  he  will  very  likely 
be  content  to  do  as  little  work  as  possible  and  still  draw  his  pay,  with 
no  thought  of  bettering  conditions  in  his  department.  But  show  him 
that  you  recognize  his  ability — that  you  know  that  he  knows  how  his 
work  should  be  done — and  he  will  readily  lend  his  cooperation. 
The  problem  of  securing  this  cooperation  has  been  given  much 
study,  and  those  who  have  met  with  the  greatest  success  have  done 
so  by  showing  the  workman  that  his  advice  and  suggestions  are 
appreciated. 

59 


50  ORGANIZATION 

No  matter  how  willing  you  may  be  to  receive  them,  the  work- 
man naturally  hesitates  to  make  suggestions  personally.  But  give 
him  an  opportunity  to  discuss  a  point  with  others  of  his  kind  and  it 
is  surprising  how  many  practical  ideas  will  be  brought  out.  Ex- 
perience has  shown  that  this  spirit  of  working  for  the  good  of  the 
business  can  best  be  maintained  through  the  formation  of  standing 
committees.  Such  committees  bring  out  the  best  ideas  of  the  men 
composing  them,  and  invariably  work  for  the  good  of  the  business. 

29.  General  Factory  Committee.  In  the  manufacturing  branch 
of  a  business,  the  first  committee  to  be  formed  is  the  general  factory 
committee.  This  committee  is  usually  composed  of  the  superin- 
tendent, who  acts  as  chairman,  the  chief  engineer  or  designer,  the 
tool  room  foreman,  or  the  special  designer  of  tools,  the  head  of  the 
cost  department,  and  two  or  three  foremen  of  the  most  important 
departments. 

The  work  of  this  and  all  other  committees  must  necessarily  be 
adapted  to  the  requirements  of  the  business,  but,  as  a  general  prop- 
osition, the  matters  to  come  before  the  committee  may  be  stated  as 
follows: 

1.  Reports  and  discussions  of  the  standardization  of  the  product. 

2.  Reports  of  progress  on  new  designs  or  the  redesigning  of  old  product 
which  has  been  authorized  at  previous  meetings. 

3.  Discussion  of  economies  in  general  operating  methods,  economies 
in  cost  of  production,  and  all  questions  of  a  similar  nature. 

4.  A  report  on  routine  work  in  the  factory — whether  stock  or  special 
contracts — condition  of  orders,  and  condition  of  stock  to  fill  future 
orders. 

5.  The  question  of  promotions.  If  all  promotions  in  the  shop  are 
brought  before  this  committee  for  approval,  it  will  do  away  with 
the  charge  of  favoritism  of  foremen  in  advancing  relatives  or  per- 
sonal friends  without  regard  to  their  qualifications.  A  foreman 
who  is  obliged  to  recommend  promotions  to  this  committee,  will  be 
very  careful  that  the  promotion  is  deserved. 

30.  Departmental  Factory  Committees.  Many  factories  manu- 
facture more  than  one  line  of  goods.  In  such  factories  it  is  advisable 
to  have  committees  to  discuss  progress  in  each  specific  line.  Members 
of  the  factory  committee  should  act  as  chairmen  of  these  depart- 
mental committees.  The  committees  will  be  composed  of  the  fore- 
men interested,  the  tool  room  foreman,  and  the  head  of  the  cost 
department. 

The  work  of  the  committee,  so  far  as  relates  to  a  particular 

60 


ORGANIZATION  51 

department,  will  be  very  similar  to  that  of  the  general  factory  com- 
mittee.    The  discussion  will  cover: 

1.  Standardization  of  product  and  suggestions  for  new  designs. 

2.  Progress  on  improvements  already  started. 

3.  Economies  in  operating  expense  and  cost  of  production. 

4.  Reports  on  routine  work. 

31.  Job  Bosses.  Carrying  the  committee  plan  a  step  farther, 
it  is  well  to  hold  occasional  meetings  of  the  job  bosses.  The  foreman 
of  each  shop  will  act  as  chairman  and  discuss  matters  pertaining  to 
work  in  his  own  shop  with  the  job  bosses  under  him. 

In  most  factories  it  is  also  advisable  to  hold,  at  least  once  a  month, 
a  general  foremen's  meeting.  This  should  be  a  meeting  of  all  fore- 
men, with  the  superintendent,  for  the  discussion  of  problems  of  a 
general  nature  and  problems  relating  to  specific  shops. 

32.  Sales  Committee.  In  the  commercial  branch,  perhaps  the 
most  important  committee  is  the  sales  committee.  This  committee 
should  consist  of  the  general  manager,  who  acts  as  chairman,  the 
sales  manager,  advertising  manager,  chief  engineer,  and  superin- 
tendent. At  times  it  may  be  advisable  to  call  in  the  head  of  the  cost 
department  and  the  tool  room  foreman. 

At  the  meetings  of  this  committee  the  following  subjects  will 
come  up  for  discussion : 

1.  General  sales  report,  showing  progress  of  the  business  as  a  whole. 

2.  Territorial  sales  reports,  showing  sales  in  each  territory.  Both  of 
these  reports  should  exhibit  comparisons  between  the  current  and 
preceding  periods. 

3.  Reports  of  sales  classified  according  to  the  nature  of  the  product, 
or  specific  lines  of  goods.  This  is  in  some  respects  the  most  impor- 
tant of  the  reports,  since  it  shows  which  are  the  fast  and  which  the 
slow  moving  lines. 

4.  Suggestions  for  and  a  discussion  of  proposed  improvements  in  the 
present  products. 

5.  Discussion  of  proposed  new  product. 

6.  Standardization. 

In  the  discussion  of  the  three  last  named  subjects  the  engineer 
and  superintendent  are  especially  interested,  and  it  is  here  that  the 
presence  of  the  cost  clerk  or  the  tool-room  foreman  will  be  required. 
A  salesman  naturally  assumes  the  attitude  of  considering  his  custo- 
mers' desires  of  the  greatest  importance.  Naturally  he  wants  the 
factory  to  manufacture  the  goods  that  he  can  sell.  But  a  discussion 
of  difficulties  to  be  surmounted,  increased  costs,  and  like  questions 

61 


52  ORGANIZATION 

will  go  far  toward  bringing  him  into  line  and  convincing  him  that  the 
interests  of  the  house  lie  in  his  pushing  standard  goods. 

33.  Advertising  Committee.  A  committee  which  is  to  a  certain 
extent  a  subdivision  of  the  sales  committee  is  the  advertising  com- 
mittee. The  general  manager  should  act  as  chairman,  and  will  have 
with  him  on  the  committee  the  comptroller,  advertising  manager,  and 
sales  manager. 

The  work  of  this  committee  will  be  confined  to  a  discussion  of: 

1.  Results  of  past  advertising,  including  periodical,  street  car,  bill- 
board, and  all  other  forms. 

2.  Appropriations  for  current  advertising. 

These  advertising  reports  are  very  important,  for,  after  suflBcient 
time  to  establish  an  equitable  cost  basis  has  elapsed,  all  future  adver- 
tising should  be  based  on  the  cost  of  actual  sales,  giving  due  con- 
sideration of  course  to  the  season  of  the  year,  general  tendency  of  the 
times,  and  other  factors  which  might  temporarily  have  a  disturbing 
influence. 

34.  Organization  Committee.  Another  committee  of  impor- 
tance, which,  for  convenience,  we  will  call  the  organization  committee, 
is  one  which  discusses  all  questions  pertaining  to  accounting  and 
record  systems.  This  committee  will  be  headed  by  the  comptroller 
and  will  include  the  sales  manager,  advertising  manager,  credit  man, 
purchasing  agent,  and  superintendent.  Sometimes  it  will  be  advis- 
able to  call  into  the  meetings  the  chief  accountant,  cost  clerk,  stores 
clerk,  and  even  shop  foremen. 

As  indicated  above,  the  chief  work  of  this  committee  will  be  a 
discussion  of  systems.  \Miile  the  comptroller  prescribes  all  systems 
of  record,  reports,  statistics,  and  accounts,  he  should  make  no  radical 
changes  without  discussing  the  proposed  change  with  those  whose 
work  will  be  directly  affected. 

Many  systems,  good  in  theory  and  which  with  cooperation 
would  work  out  in  actual  practice,  have  failed  because  they  were 
forced  on  the  business.  A  systematizer  may  install  a  good  system 
and  get  it  into  operation,  but  unless  he  has  secured  the  cooperation 
of  those  upon  whom  its  operation  will  devolve,  he  will  very  likely  find 
that  after  he  leaves  there  is  a  gradual  disintegration  until  conditions 
are  worse  than  before  the  change  was  attempted. 

It  is  seldom  that  a  foreman  or  a  clerk  will  resent  a  change  if  he  is 

62 


ORGANIZATION  53 

made  to  feel  that  he  is,  in  part  at  least,  responsible  for  the  change. 
When  new  systems  are  introduced  in  the  shop,  the  foremen  are  quite 
likely  to  look  upon  them  as  a  means  of  checking  up  their  departments 
— SL  sort  of  poHce  supervision.  This  is  the  inevitable  result  when  inno- 
vations of  any  sort  are  instituted  by  employers  or  their  representa- 
tives. All  employers  desire  the  willing  and  active  co-operation  of  their 
employes  and  are  quick  to  complain  that  employes  do  not  "take  an 
interest  in  their  work."  But  offering  the  market  price  for  routine 
service  and  expecting  enthusiastic  co-operation  is  manifestly  unfair; 
this  accounts  for  the  prevailing  distrust  on  the  part  of  employes 
toward  prizes,  bonuses,  "welfare"  movements,  and  other  schemes 
which  they  think  are  offered  them  in  lieu  of  salary  to  induce  them  to 
put  forth  extra  effort.  Employers  are  learning  now,  as  never  before, 
that  in  order  to  get  the  most  from  labor  they  must  themselves  be  above 
suspicion.  Just  in  proportion  as  a  high  standard  is  maintained  by  the 
management,  the  workmen  will  become  real  associates  of  their  employ- 
ers and  as  thoroughly  opposed  to  time-serving  methods  and  other 
expedients  calculated  to  restrict  production  as  are  employers. 

Committee  Meetings.  The  frequency  of  meeting  of  the  com- 
mittees herein  suggested  must  be  decided  by  each  manufacturer.  No 
hard-and-fast  rules  can  be  laid  down,  but  generally  these  suggestions 
will  apply: 

General  factory  committee,  weekly. 

Departmental  factory  committees,  once  in  two  weeks. 

Job  bosses  and  general  foremen's  meetings,  monthly. 

Sales  committee,  weekly. 

Advertising  committee,  monthly. 

Organization  committee,  monthly. 

Committee  Secretaries.  At  each  committee  meeting,  a  stenog- 
rapher should  be  present  to  act  as  secretary.  When  no  record  is 
kept,  discussions  are  quite  likely  to  be  rambling  rather  than  confined 
to  a  specific  subject.  Then,  too,  matters  which  were  discussed  at  the 
last  meeting  have  grown  hazy,  and  if  a  man  who  is  responsible  for 
putting  into  operation  a  given  suggestion  has  failed  in  his  duty,  there 
is  always  the  chance  that  no  one  will  think  of  it  at  the  next  meeting 
unless  he  brings  it  up.  If,  however,  an  exact  record  is  kept  of  these 
discussions  and  full  reports  are  delivered  to  every  member  of  the  com- 
mittee before  the  next  meeting,  a  foreman,  or  other  member,  will  be 
very  careful  about  making  statements  or  promises  unless  he  knows 
that  they  can  be  fulfilled. 

63 


54  ORGANIZATION 

Where  possible,  it  is  best  to  have  the  same  stenographer  act  as 
secretary  to  all  committees,  as  he  will  become  familiar  with  their  work 
and  can  handle  it  much  more  expeditiously. 

THE  SUGGESTION  PLAN 

35.  In  many  factories,  and  even  in  mercantile  establishments, 
a  modification  of  the  committee  idea  has  been  successfully  introduced 
in  the  form  of  what  is  known  as  the  suggestion  plan.  This  plan  con- 
sists in  asking  for  suggestions  from  all  workmen,  these  suggestions  to 
pertain  to  manner  of  handling  their  own  work,  improvements  for  the 
benefit  of  the  business  as  a  whole,  safety  appliances,  sanitary  condi- 
tions, and  anything  that  may  be  of  benefit  to  the  business. 

While  between  foremen  and  heads  of  departments  the  com- 
mittee plan  undoubtedly  works  to  the  best  advantage,  we  advocate 
the  suggestion  plan  for  the  rank  and  file  of  workmen.  Even  when 
called  into  a  committee  meeting,  the  workman  sometimes  hesitates 
to  express  his  opinions,  when  if  he  were  permitted  to  give  them  in 
some  other  manner  he  would  make  many  valuable  suggestions.  The 
plan  is  to  place  at  convenient  points  boxes  with  slots  cut  in  the  top 
in  which  the  suggestions  can  be  placed.  Workmen  are  invited  to 
write  out  their  suggestions  and  place  them  in  these  boxes.  They 
may  either  sign  them  or  give  their  clock  numbers.  The  latter  plan 
is  sometimes  advisable,  as  it  does  not  reveal  the  identity  of  the  men 
making  suggestions.  All  suggestions  are  taken  up  in  committee 
meeting  by  the  committee  directly  interested,  and  a  small  prize  is 
given  for  those  suggestions  that  are  put  into  use.  Even  so  large  a 
department  store  as  Marshall  Field  &  Co.  has  found  it  extremely 
profitable  to  offer  $1.00  for  each  suggestion  offered  by  an  employe  that 
is  finally  adopted. 

Another  method  is  to  use  autographic  registers  like  the  one  illus- 
trated in  Fig.,  1 1  on  which  three  copies  are  made.  The  original  is  sent  to 
the  oflBce,  the  duplicate  is  retained  by  the  workman,  while  the  triplicate 
remains  on  a  roll  in  the  machine.  This  is  removed  at  the  time  of  the 
committee  meeting,  and  any  suggestions  adopted  are  posted  on  a 
bulletin  board.  The  workman  need  not  even  sign  his  number,  but 
can  present  the  duplicate  as  proof  that  the  suggestion  was  made  by 
him. 

The  introduction  of  any  or  all  of  these  committee  and  suggestion 

64 


ORGANIZATION 


55 


Fig.  11.  Autographic  Register  Made  by  United  Auto- 
graphic Register  Co. 


plans  requires  careful  study,  but  when  once  put  into  operation  they 
will  prove  both  successful  and  of  inestimable  value  to  the  business. 

ORAL  ORDERS  CAUSE  CONFUSION 

36.  Probably  no  more  prolific  source  of  confusion  and  mis- 
understanding of  in- 
structions is  to  be 
found  than  in  the 
habit  of  giving  oral 
orders.  "I  understood 
you  to  say"  or  "I 
thought  you  meant" 
are  familiar  excuses 
offered  for  a  failure  to 
follow  what  the  one 
giving  them  considered  clear  and  explicit  instructions. 

The  absolute  necessity  of  clearly  defined  authorities  that  every 
man  connected  with  an  organization  may  know  from  whom  he  is 
to  receive  orders,  is  well  recognized.  When  we  get  above  the  one- 
man  business,  employes  are  not  left  in  doubt  as  to  the  source  of 
their  orders.  Why  then  should  there  be  left  the  slightest  chance  of 
misunderstanding  as  to  the  nature  of  their  orders? 

When  we  issue  orders  that  are  to  be  executed  by  someone  outside 
of  our  own  organization,  we  are  careful  that  they  are  in  writing.  If 
an  order  for  goods  is  placed  by  telephone  or  telegraph  it  is  confirmed 
in  writing,  not  alone  for  the  legal  protection  afforded  by  a  valid  con- 
tract, but  that  there  may  be  no  confusion  or  misunderstanding. 
When  we  receive  an  order  we  prefer  to  have  it  in  writing  for  the  same 
reasons. 

The  success  of  any  undertaking  is  largely  dependent  on  the 
proper  execution  of  orders.  Surely,  orders  to  be  executed  within  the 
organization  are  of  equal  importance  to  those  that  will  be  executed 
by  an  outsider,  and  at  least  the  same  care  should  be  exercised  in 
issuing  them.  The  logical  conclusion  then  is  that  they  should  be 
^ven  in  writing.  True,  oral  instructions  are  sometimes  necessary, 
but  all  orders  and  instructions  of  importance  should  be  in  writing. 

There  are  many  classes  of  internal  orders,  depending  on  the  nature 
of  the  business.     Among  them  is  a  class  of  inter-departmental  com- 


65 


r>6  ORGANIZATION 

muuications  more  in  the  nature  of  correspondence  than  direct  orders. 
In  the  harmonious  operation  of  an  organization,  many  requests  are 
made  between  departments;  general  orders  affecting  all  departments 
are  given  by  the  manager;  bulletins  are  issued  by  a  department 
manager  to  all  employes  under  him — all  of  these  should  be  in  writing. 
As  an  illustration,  take  a  special  order  from  a  customer.  A  sales- 
man reports  that  an  order  can  be  secured  for  certain  goods  provided 
some  slight  change  is  made  in  the  design.  The  sales  manager  will 
communicate  with  the  superintendent  about  the  cost  of  making  the 
changes.     The  question  then  goes  to  the  general  manager  for  a  final 


0<ate. 
TO DEPARTMENT 


StGNED . 

DEPXKeAD 


Fig.  12.    Blank  Used  for  Interdepartment  Correspondence 

decision.  Imagine  the  chances  for  argument  if  these  negotiations 
are  carried  on  orally,  but  if  in  writing,  what  each  man  said  is  on 
record  and  entirely  clear. 

No  elaborate  form  is  needed  for  these  communications,  but  it 
is  best  to  use  a  form  differing  from  that  used  in  the  regular  corre- 
spondence. A  simple  form  is  shown  in  Fig.  12.  The  form  should 
always  show  from  what  department  it  comes,  and,  to  avoid  confusion, 
it  is  an  excellent  plan  to  use  a  distinctive  color  for  each  department. 

Each  department  should  keep  a  file  of  these  house  communica- 
tions, including  carbon  copies  of  those  issued  by  them.    It  is  fre- 

66 


ORGANIZATION  57 

quently  necessary  to  follow  up  their  requests  to  secure  reasonably 
prompt  action. 

To  insure  the  follow-up,  each  department  should  be  provided 
with  a  follow-up  file  or  tickler,  a  file  having  thirty-one  numbered 
compartments  to  represent  the  days  of  the  month.  This  same  file 
can  be  used  for  all  sorts  of  memoranda  of  matters  requiring  attention 
on  a  future  date. 

ADVANTAGES  OF  UNIFORM  BLANKS 

37.  One  of  the  little  points  in  the  routine  workings  of  a  business 
office  that  is  not  always  given  proper  consideration  is  the  establish- 
ment of  a  uniform  system  of  blanks.  The  blanks  used  for  a  given 
purpose  in  one  department  will  be  of  a  certain  size  and  color,  while 
those  used  for  the  same  purpose  in  another  department  will  be  radi- 
cally different  in  both  size  and  color.  Or  blanks  of  entirely  different 
classes  will  be  identical  in  size  and  color.  The  result  is  a  miscel- 
laneous collection  of  blanks  in  all  sorts  of  shapes  and  sizes. 

Uniformity  in  blanks  at  once  establishes  a  means  of  identifica- 
tion, avoids  confusion,  saves  filing  space  and  limits  mistakes. 

Though  we  may  have  given  the  subject  little  thought,  we  have 
long  been  accustomed  to  uniformity  in  certain  blanks  and  business 
papers.  If  we  have  been  receiving  freight  over  several  railroads  the 
freight  bills  of  each  have  been  readily  distinguished  by  size,  color  and 
style  of  printing.  Correspondence  from  our  customers  is  recognized 
by  the  style  of  the  stationery,  and  orders  are  distinguished  from  other 
communications  of  the  same  concern. 

Aside  from  the  question  of  convenience,  there  is  a  certain  adver- 
tising value  in  stationery  and  blanks  with  distinctive  features.  At  a 
glance  we  recognize  in  the  morning  mail  the  communications  from 
certain  of  our  correspondents.  We  feel  sure  this  envelope  contains 
a  remittance,  that  one  a  welcome  order,  another  an  invoice  of  goods 
for  which  we  have  been  waiting;  each  is  recognized  by  a  certain  style 
of  the  envelope.  At  no  additional  expense  we  can  make  our  own 
stationery  distinctive.  Letter  heads,  order  blanks,  statements,  in- 
voices, remittance  blanks  will  be  recognized  not  by  one  but  by  all  of 
our  regular  correspondents.  They  will  soon  learn  to  associate  our 
name  with  certain  styles  of  stationery. 

Distinctive    stationery    does    not    necessarily    mean    expensive 

67 


58  ORGANIZATION 

stationery.  Our  advice  is,  buy  the  best  quality  that  you  feel  you  can 
afford;  above  all,  make  it  distinctive,  make  it  represent  you.  Adopt 
a  color,  or  style  of  type,  or  shade  of  ink  that  will  make  your  stationery 
stand  out  from  the  mass  coming  to  the  desk  of  every  business  man. 
The  problem  of  filing  space  is  a  serious  one  in  most  offices, 
already  overcrowded  Filing  devices  are  made  in  certain  sizes  that 
have  become  standard.  The  more  closely  blanks  to  be  filed  conform 
to  these  sizes,  the  less  space  will  be  required,  ^^^lile  we  cannot 
regulate  the  sizes  of  the  stationery  of  our  correspondents,  we  can 
regulate  the  size  of  our  blanks  that  will  eventually  find  their  way 
into  our  own  files. 


68 


FACTORY  ORGANIZATION 
AND  CONTROL 


MANUFACTURING 

Manufacturing  Conditions  and  Developments.  Millions  of 
dollars  are  annually  spent  in  building  new  factories.  Other  millions 
are  spent  in  equipping  them  with  the  best  machinery  that  trained  and 
experienced  men  have  been  able  to  devise.  Still  more  millions  of 
money  are  annually  paid  to  the  officials  who  manage  and  the  employees 
who  man  these  enormous  manufacturing  plants. 

Why?  Why  could  not  these  expert  employees  labor  in  their  own 
homes  or  their  individual  shops,  and  produce  the  manufactured  goods 
without  all  these  enormous  expenses?  What  are  the  necessities  which 
impel  men  to  spend  these  vast  sums  of  money  in  erecting,  equipping, 
and  operating  these  immense  plants? 

Casually  considering  the  question,  the  faciorj/  or  manufactur- 
ing plant  does  not  seem  to  be  a  real  necessity.  A  large  force  of 
employees  working  under  a  single  management  does  not  seem  to  be 
the  most  economical  method  of  producing  the  desired  goods.  Cer- 
tainly every  man  is  free  to  choose  his  own  particular  line  of  work; 
and  there  are  many  persons  who,  seeing  a  large  force  of  employees 
giving  their  entire  life  work  to  the  enrichment  of  successful  manu- 
facturers, while  the  employees  themselves  work  long  hours  at  hard 
and  laborious  tasks  and  fare  so  poorly  that  they  are  seldom  enabled 
to  save  any  considerable  portion  of  their  wages,  not  infrequently  end- 
ing an  industrious  life  in  poverty  and  want,  are  led  to  believe  that  the 
factory  is  not  a  necessity  or  even  a  benefit  to  mankind,  but  rather  a 
means  for  reducing  the  individual  worker  to  a  condition  of  grinding 
servitude,  voluntary  perhaps,  but  often  the  result  of  dire  necessity. 

These  people,  considering  all  the  hardships  in  the  life  of  factory 
employees,  are  likely  to  hold  and  often  to  express  the  opinion  tliat  the 
highest  welfare  of  the  human  race  really  demands  a  return  to  the 
simpler  life  of  early  days,  when  a  much  larger  proportion  of  the  people 
lived  upon  farms,  producing  their  own  provisions,  raising  the  flax 


G9 


2  MACHINE  SHOP  MANAGEMENT 

and  the  wool  wherewith  they  clothed  themselves,  quite  independently 
of  the  wealthy  classes,  whether  bankers,  capitalists,  or  manufacturers, 
the  factory  as  we  know  it  to-day  having  hardly  begun  its  marvelous 
era  of  existence. 

Let  us  consider  for  a  moment  how  all  this  has  come  about.  In 
the  earlier  years  of  the  independence  of  this  country,  the  chief  depend- 
ence was  upon  the  results  of  agricultural  work.  In  due  time  the 
development  of  the  resources  of  the  country  has  placed  manufac- 
turers at  the  front,  so  that  in  very  recent  years  the  value  of  manufac- 
tured products  has  become  nearly  double  that  of  agricultural. 

These  results,  like  many  others  of  a  less  notable  character,  com- 
menced from  very  small  beginnings;  and  it  has  been  by  inborn  me- 
chanical ability,  remarkable  ingenuity,  patient  development,  and 
tireless  energy,  that  mechanical  undertakings  have  been  developed 
from  meager  initial  facilities,  until,  in  the  vast  manufacturing  enter- 
prises of  the  present  day,  the  American  mechanic  in  nearly  all  lines 
leads  the  world  in  originality  and  practical  achievement. 

Early  New  England  Mechanics.  WTien  the  early  settlers  of  New 
England  labored  under  the  restrictive  and  harassing  laws  of  the 
Mother  Country,  and  under  their  administration  were  goaded  and 
exasperated  beyond  endurance  in  many  ways,  not  the  least  of  which 
was  that  of  being  obliged  to  purchase  many  manufactured  articles 
from  England  at  extortionate  prices — or,  if  purchased  from  other 
countries,  still  paying  taxes  to  England  for  the  privilege — they  re- 
belled. Determining  to  buy  no  more  foreign  goods,  they  set  out,  at 
first  in  most  clumsy  and  primitive  fashion,  to  make  for  themselves 
such  articles  as  were  really  necessaries,  and.  In  noble  self-denial,  to 
live  without  those  which  they  could  not  make  for  themselves.  They 
doubtless  little  realized,  however,  that  they  were  thereby  laying  the 
foundations  of  the  greatest  manufacturing  country  in  the  world.  By 
the  principles  thus  inaugurated,  they  instituted  the  first  industrial 
boycott  in  the  history  of  the  country — the  one  that  has  had  more  im- 
portant and  far-reaching  influences  than  anything  of  the  kind  before 
or  since. 

Industrial  Freedom.  While  the  departure  of  the  Pilgrims  for  this 
country,  and  the  making  of  their  homes  on  the  "stern  and  rock-bound 
coast"  of  New  England,  were  for  the  purpose  of  seeking  religious 
freedom,  it  is  also  true  that  freedom  soon  meant  ver;v  much  more  than 

70 


MACHINE  SHOP  MANAGEMENT  3 

this  to  them;  and  with  a  larger  conception  of  their  opportunities  and 
possibiUties,  some  of  which  were  in  reahty  forced  upon  them  by  adverse 
circumstances,  there  came  to  them  the  inspiration  of  industrial  as  well 
as  religious  freedom.  The  world  has  seen  and  has  given  them  due 
credit  for  the  determined  and  heroic  manner  in  which  they  went 
about  their  self-appointed  task;  and  they  have  amply  demonstrated  to 
posterity  their  appreciation  of  and  grasp  upon  the  possibilities  and 
conditions,  and  the  breadth  and  nobility  of  character  which  they 
exhibited  in  w^orking  out  the  many  perplexing  problems  that  con- 
fronted them. 

Development  of  American  Industrial  Enterprises.  American 
manufacturing  came  into  being  with  these  small  beginnings  and  crude 
efforts  to  fashion  those  common  objects  of  household  necessity  and 
daily  use,  which,  although  crude  and  clumsy,  yet  answered  the  pur- 
pose until  supplanted  later  by  those  of  more  improved  form  and 
workmanship.  These  primitive  successes  led  to  greater  endeavors, 
and  developed  into  still  broader  usefulness,  when  the  time  came  that 
necessities  had  been  provided  for  and  luxuries  were  now  demanded 
by  the  higher  plane  of  living  to  which  the  people  had  in  due  time 
advanced. 

Thus  the  crude  beginnings  and  rude  surroundings  among  which 
the  early  American  mechanic  performed  his  work,  were  in  his  own 
house.  Soon  he  outgrew  these  primitive  facilities,  and  built  small 
shops,  frequently  in  the  garden  or  back  yard  of  his  home.  These 
gradually  enlarged.  The  development  of  the  business  demanded 
increased  facilities,  and  buildings  were  erected  quite  independent  of 
the  home  surroundings,  and  two  or  more  men  were  associated  as 
manufacturers.  These  plants  developed  and  enlarged,  and  in  due 
course  of  time  became  the  machine  shops  and  the  factories,  which 
have  since  multiplied  many  hundreds  of  times,  not  only  in  number 
and  in  value,  but  in  influence  and  importance,  until  to-day  our  coun- 
try stands  the  foremost  manufacturing  nation  of  the  world.  This  is 
true,  not  only  as  to  the  volume  and  value  of  her  manufactured  produc- 
tions, but  also  as  to  their  great  range  and  diversity  of  kind  and  use- 
fulness. One  by  one  the  American  mechanic  has  taken  up  the  various 
classes  of  work  formerly  monopolized  by  this  country  or  that,  failing 
perhaps  at  first,  but  always  progressing  anddevcloping,until,  by  native 
ingenuity  and  unflagging  energy,  all  obstacles  have  been  overcome, 

71 


4  MACHINE  SHOP  MANAGEMENT 

all  diflSculties  put  aside,  new  industries  have  come  into  being,  and 
other  "victories"  of  peace  "no  less  than  those  of  war"  have  been 
added  to  the  laurels  of  tlie  American  mechanic  and  of  his  ever-ready 
and  ever-confident  partner,  the  American  manufacturer  and  capitalist. 
It  is  to  this  combination,  each  confident  of  and  faithful  to  the  abilities 
and  honor  of  the  other,  and  each  acting  his  part  in  his  own  sphere  of 
usefulness,  that  the  immense  success  of  American  manufacturing  is 
due. 

The  factories  of  to-day  are  the  logical  results  of  a  natural  growth 
and  development  of  the  various  branches  of  business  for  which  they 
were  originally  built  and  organized.  As  the  buildings  increased  in 
numbers  and  dimensions,  the  methods  of  construction,  the  equipment, 
and  the  systems  by  which  they  were  managed,  developed  methods  of 
greater  economy  and  eflSciency. 

Tools  of  the  Early  Mechanic.  The  early  mechanic  had  few  tools 
and  appliances  wherewith  to  perform  his  work;  and  these  were  crude 
and  primitive,  consisting  principally  of  a  limited  number  of  hand-tools 
brought  from  the  Old  Country,  and  occasionally  a  hand-lathe  of 
modern  dimensions  and  operated  by  foot-power.  But  with  their  few 
tools  and  meager  facilities,  and  animated  by  the  condition  that 
"necessity  is  the  mother  of  invention,"  these  old-time  mechanics  pro- 
ceeded with  practical  common  sense  and  ingenuity  to  design  and  con- 
struct better  tools  and  machines — which  have  continually  developed, 
until  we  have  the  splendid  array  of  manufacturing  machinery  seen  on 
every  hand  to-day.  As  machinery  developed,  larger  and  larger 
amounts  of  money  had  to  be  expended;  and  the  banker  had  to  be 
called  upon  to  provide  it.  Thus  the  capitalist  became  the  partner 
of  the  manufacturer,  the  one  furnishing  the  mechanical  ability  and 
inventive  genius  for  the  actual  designing  and  building  of  machinery 
and  manufactured  goods,  while  the  other  contributed  the  money  to 
carry  on  the  work,  and  the  business  ability  necessary  to  market  the 
product. 

Relations  of  Capital  and  Labor.  In  brief,  this  is  the  condition 
to-day.  But,  says  the  carping  critic,  "there  are  often  hundreds  of 
struggling  and  hard-working  employees  where  there  is  one  rich 
manufacturer."  This  may  be  partly  true,  although  it  is  a  fact  beyond 
dispute  that  the  American  mechanic  is  the  best  paid  workman  in  the 
world.    It  is  true  that  there  are  hundreds  of  workmen  to  one  capital- 

72 


MACHINE  SHOP  MANAGEMENT  5 

ist.  Why?  The  Creator  has  so  ordained  that  there  shall  be  many  of 
moderate  ability,  and  but  few  possessing  the  unusual  ability  and 
talent  to  lead  them.  So  it  has  ever  been  since  the  days  of  Moses,  and 
so  it  probably  will  ever  continue  to  be.  Doestick's  regiment  com- 
posed entirely  of  colonels  was  a  manifest  absurdity,  and  so  intended 
as  an  illustration  of  a  well-known  and  natural  condition  that  should 
be  realized  by  every  reasonable  and  thoughtful  man  who  considers 
these  questions. 

Considering  carefully  the  great  scheme  of  manufacturing,  and 
the  immense  industrial  problem  of  supplying  the  wants  of  the  people 
of  this  great  country  and  providing  for  the  vast  volume  of  trade  that 
goes  abroad,  by  the  modern  manufacturing  plants  equipped  with  all 
that  is  latest  and  best  in  machinery  for  every  conceivable  purpose,  it 
should  not  be  forgotten  that,  as  the  very  basis  and  foundation  of  the 
whole,  stands  the  modern  machine  tool,  and  that  it  is  principally  to 
the  great  and  important  development  of  this  that  we  owe  primarily 
our  industrial  growth  and  prosperity  as  a  manufacturing  nation 
To  the  machine  tool  may  easily  be  traced  the  gradual  but  continued 
upward  tendency  of  the  mechanic  and  his  methods,  from  the  hard 
physical  toil  and  small  pay  of  the  early  days,  to  the  immeasurably 
lighter  exertion  and  increased  compensation  made  possible  by  the 
highly  developed  condition  of  the  automatic  machines  of  the  present 
day.  It  has  been  an  oft-repeated  victory  of  "mind  over  matter," 
wherein  brains  have  won  where  ha7ids  made  but  little  advance;  ideas 
have  developed  wonderful  mechanisms  that  have  revolutionized  the 
earlier  methods  of  manufacturing  and  raised  the  standard  of  mechan- 
ical excellence  beyond  what  was  thought  possible  years  ago,  and  at  the 
same  time  reduced  the  cost  to  a  fraction  of  its  former  amount. 

Here,  again,  the  capitalist  furnished  the  means  whereby  the 
practical  realization  of  the  ingenious  designs  of  the  mechanic's  fertile 
brain  became  possible,  and  the  successful  combination  of  capital  and 
labor  brought  success  to  both. 

Combinations  of  Capital.  But  here  comes  our  critical  labor 
agitator  again  with  the  comment:  "It  is  all  very  well  to  talk  about 
the  amicable  relations  of  capital  and  labor,an(l  how  each  ought  to  help 
the  other,  but  how  about  the  great  combinations  of  capital  that  we 
ordinarily  call  "trusts"?  To  give  a  correct  and  intelligent,  as  well 
as  a  fair  and  truthful  answer  to  this  question,  we  must  know  the 

73 


6  MACHINE  SHOP  MANAGEMENT 

conditions  under  which  the  combination  is  formed,  the  plan  upon 
which  it  is  organized,  and  the  object  of  its  formation.  As  these  are 
not  given,  we  must  assume  the  conditions  of  some  well-known  com- 
bination. Let  it  be  the  United  States  Steel  Corporation.  One  of 
the  foremost  men  in  this  combination  has  defined  his  position  on  the 
subject,  and  in  so  doing  has  outlined  the  policy  of  the  corporation, 
by  saying: 

"Any  combination  of  capital  which  operates,  first,  to  prevent  com- 
petition; second,  to  increase  the  price  of  the  product;  and  third,  to  reduce 
the  wages  of  the  workmen,  is  working  under  a  trio  of  wrong  principles  that 
sooner  or  later  will  bring  about  disaster." 

Let  us  see  how  the  actual  operation  of  this  combination  of  capital 

really  works  out  in  practice. 

First — The  Steel  Corporation  has  never  sought  to  prevent  competition. 
Steel  mills,  large  and  small,  have  operated  when,  where,  and  how  they  pleased, 
with  no  interference  from  the  Steel  Corporation. 

Second — The  price  of  steel  has  not  been  increased;  on  the  contrary, 
it  has  been  greatly  reduced  under  its  management.  Thirty  years  ago  a  very 
indifferent  quality  of  machine  steel  cost  from  8  to  12  cents  per  pound.  To-day 
ordinary  machine  steel  of  a  much  better  quality  than  that  mentioned  above 
can  be  had  for  2  cents  a  pound  or  less. 

Third — The  wages  of  workmen  have  not  only  not  been  reduced,  but 
have  actually  been  doubled  since  the  labor  troubles  in  the  steel  mills  known 
as  the  "Homestead  Strike"  (1892).  The  Steel  Corporation  has  gone  much 
further  than  to  double  the  wages  of  the  steel  workers.  They  have  made  it 
possible  for  the  workmen  to  become  partners  in  the  great  work  of  the  cor- 
poration, by  obligating  themselves  to  sell  to  their  workmen  a  certain  amount 
each  year  of  stock  in  the  corporation,  so  that  the  men  who  labor  in  the  mills 
may  also  become  part  owners  and  participate  in  the  dividends  resulting  from 
their  work  on  exactly  the  same  percentage  as  the  capitalist  himself  does. 

Our  critic  comes  back  to  the  charge  by  saying  that  "  the  Steel  Corporation 
has  bougkt  up  many  steel  plants  in  various  parts  of  the  country,  and  added 
them  to  its  already  enormous  properties."  Quite  true.  And  for  what  pur- 
pose? Let  us  see  what  they  do  with  these  plants.  How  do  they  manage 
this  part  of  the  business?  What  is  their  plan  of  working?  The  conditions 
were  these:  Before  the  advent  of  the  United  States  Steel  Corporation,  there 
were  many  isolated  steel  manufacturing  plants,  each  being  equipped  for  the 
making  of  a  number  of  kinds  of  steel  products — for  instance,  steel  railroad 
rails,  structural  steel,  merchant  bar  steel,  steel  boiler-plates,  steel  tank-plates, 
and  so  on.  The  equipment  necessary  for  producing  these  different  forms  of 
steel  was  very  expensive;  and  inasmuch  as  a  considerable  portion  of  this 
equipment  for  some  particular  kind  of  product  would  necessarily  be  idle  on 
account  of  the  fluctuations  of  trade,  the  expense  burden  was  abnormally  high 
on  account  of  this  idle  equipment.  How  has  this  condition  been  handled  by 
the  Steel  Corporation?  This  has  been  the  plan:  Suppose  they  have  purchased 
five  plants,  each  making  the  five  classes  of  product  indicated  above,  and  working 

74 


MACHINE  SHOP  MANAGEMENT  7 

under  the  disadvantages  of  a  variety  of  products.  These  plants  are  examined, 
and  inventories  made  of  their  equipments.  It  is  then  decided  which  mill  is 
best  adapted  for  making  each  one  of  the  five  classes  of  products.  Then  there 
is  a  redistribution  of  the  equipment  of  the  plants,  placing  in  the  plant  selected 
for  it  all  that  in  the  several  plants  is  adapted  to  a  certain  product;  removing 
all  the  machinery  from  this  plant  that  is  not  adapted  to  the  particular  product 
to  be  turned  out,  to  be  distributed  among  the  other  plants  according  to  the 
particular  class  of  products  for  which  each  one  is  designed.  Thus  each  plant  is 
equipped  to  turn  out  the  single  class  of  product  which  is  most  appropriate  for 
it,  by  drawing  upon  the  other  plants  for  such  machinery  as  they  have  which 
may  supplement  its  own  in  this  line. 

By  this  plan,  each  plant  makes  but  one  class  of  product.  Having  the 
best  machinery  from  all  the  plants  for  this  purpose,  and  concentrating  its 
energies  on  a  single  class,  it  is  enabled  not  only  to  turn  out  a  better  product, 
but  to  turn  it  out  much  more  economically  than  before.  As  the  workmen 
become  more  expert  on  their  single  line  of  product,  they  work  more  efficiently 
and  consequently  earn  higher  wages.  All  these  conditions,  producing  an 
economical  output,  enable  the  manufacturers  to  reduce  the  selling  price. 

The  conditions  of  economy  brought  about  in  the  management  of  the 
manufacturing  operations  and  in  marketing  the  product,  are  very  marked 
when  a  large  number  of  plants  operate  imder  one  general  head.  Again,  with 
the  immense  amount  of  capital  at  the  disposal  of  such  a  corporation,  it  is 
enabled  to  secure  the  services  of  the  best  experts,  and  the  most  valuable  processes 
in  existence. 

There  are  many  other  advantages,  not  only  to  the  corporation  and  its 
employees,  but  to  the  users  of  its  products,  and  so  to  the  general  public,  when 
a  combination  of  capital  is  honestly  made  and  honestly  administered. 

Betterment  of  Industrial  Conditions.  What  has  been  said  of  the 
Steel  Corporation  as  to  favoring  of  employees,  has  been  duplicated 
in  various  ways  by  different  manufacturers  all  over  the  country. 
Factory  sites  have  been  beautified  by  landscape  gardening,  and  trees 
and  shrubbery  have  made  the  surroundings  of  working  men  and 
women  pleasant  and  attractive.  Land  has  been  purchased,  and 
workingmen's  homes  built  and  rented  to  them  at  fair  rates.  Factory 
dining  rooms  are  provided;  reading  rooms,  libraries,  gymnasiums, 
clubs,  and  social  organizations  are  inaugurated;  emergency  hospitals 
or  "first  aid"  rooms  are  arranged,  with  all  or  nearly  all  these  services 
free  except  that  provided  in  dining  rooms,  which  is  furnished  at 
actual  cost.  More  recently,  a  firm  in  Connecticut  announces  that 
it  will  furnish  free  medical  attendance  to  all  its  employees  and  their 
families. 

Schools  have  been  established  for  apprentices,  wherein  they 
receive  such  technical  instruction  as  may  be  necessary  to  their  success 
•Ji  the  trade  they  are  learning — and  this,  not  only  without  expense  to 

75 


8  IMACHINE  SHOP  MANAGEIVIENT 

themselves  or  to  their  parents,  but  they  are  paid  by  the  hour  for  time 
spent  in  their  school  work,  the  same  as  for  their  time  in  the  shop. 

To  foster  a  practical  interest  in  the  work  of  the  shops,  many 
concerns  have  what  is  called  the  Suggestion  System,  whereby  the 
employees  may  make  WTitten  suggestions  of  any  improvements  which 
they  desire  as  to  shop  methods  and  routine,  the  design  and  construc- 
tion of  the  product,  and  many  kindred  subjects,  the  best  suggestions 
made  each  month  receiving  prizes. 

All  of  these  matters  emphasize  the  fact  that  the  mutual  interests 
of  the  capitahst  who  manufactures  and  sells,  and  of  the  employee  by 
the  efforts  of  whose  hand  and  brain  the  products  are  being  turned  out, 
are  each  year  being  recognized  and  in  a  very  large  majority  of  cases 
are  being  acted  upon  in  good  faith. 

Methods  of  Modem  Manufacturing.  In  former  times,  machines 
were  built  one  at  a  time  or  in  very  small  lots.  Parts  were  made  and 
fitted  to  the  particular  machine  to  w-hich  they  belonged;  and  while  the 
same  general  form  and  dimensions  were  practically  maintained,  there 
was  no  attempt  made  to  render  the  several  parts  so  exact  as  to  fit  upon 
any  other  machine  than  the  one  for  which  they  were  intended.  Sys- 
tems of  gauges  had  not  been  developed,  and  the  planer  was  yet  a 
comparatively  new  tool;  much  work  was  still  done  by  hand,  the  ham- 
mer, the  cold  chisel,  and  the  file  being  the  chief  reliance  of  a  large 
majority  of  machinists.  This  was  the  state  of  the  machine  shop  and 
its  methods  nearly  up  to  the  year  1800. 

Interchangeable  Manufacturing.  The  use  of  milUng  cutters  and 
the  commencement  of  practically  interchangeable  manufacturing, 
came  into  machine  shop  practice  at  nearly  the  same  time.  It  has 
been  said  that  "but  for  the  milUng  machine,  there  would  have  been 
no  such  thing  as  interchangeable  manufacturing."  It  might  be 
said  with  quite  as  much  truth,  that  if  the  system  of  interchangeable 
manufacturing  had  not  been  conceived,  there  would  have  been  little 
need  for  the  milling  machine.  Each,  to  a  great  extent,  depended  very 
much  upon  the  development  of  the  other — and  upon  a  third  fac- 
tor, the  conception  and  development  of  the  method  of  handling 
work  (particularly  small  parts)  in  jigs  and  fixtures. 

Milling  cutters  were  made  in  America  by  one  of  the  early  ma- 
chinists, a  Frenchman  named  Vaucanson,  who  died  in  1782.  A 
sample  of  these  had  a  hexagonal  instead  of  a  round  hole,  and  the 

76 


MACHINE  SHOP  MANAGEMENT  d 

pitch  of  the  teeth  was  very  fine,  so  that  the  cutter  resembled  a  saw 
rather  than  those  at  present  in  use.  It  is  said  that  a  man  by  tlie  name 
of  Bodmer,  in  Manchester,  England,  had  made  a  milling  machine 
in  1824. 

It  is  altogether  probable  that  Eli  WTiitney,  the  inventor  of  the 
cotton  gin,  had  built  and  used  milling  machines  previous  to  this  date, 
as  the  following  item  of  mechanical  history  would  seem  to  indicate. 
In  January,  1798,  Eli  "Whitney  received  from  the  United  States 
Government  an  order  to  furnish  ten  thousand  muskets,  of  which  four 
thousand  were  to  be  delivered  in  one  year,  and  the  balance  in  two 
years.  Mr.  Whitney  went  at  the  undertaking  in  a  very  thorough 
and  systematic  manner.  He  first  developed  a  water  power;  then 
erected  suitable  buildings;  considered  and  developed  ways  and  means 
for  a  larger  and  better  product  than  had  previously  been  realized; 
designed  and  built  machinery  to  effect  it;  and  trained  workmen  to  a 
degree  of  sldll  necessary  to  success  in  their  new  employment. 

The  diflSculties  which  Mr.  Whitney  encountered  and  the  ob- 
stacles which  he  had  to  overcome,  were  so  much  greater  than  he 
anticipated  that  it  was  really  eight  years  instead  of  two  before  he 
had  succeeded  in  completing  the  government  order  for  the  ten  thou- 
sand muskets.  However,  the  progress  which  he  had  made  in  this 
new  enterprise,  and  the  character  of  the  product  which  he  turned 
out  and  delivered,  were  so  satisfactory  to  the  government  oflficials 
that  Congress  treated  him  with  the  greatest  courtesy  and  considera- 
tion. 

His  shops  were  situated  in  the  city  of  New  Haven,  Conn.,  and 
soon  became  the  Mecca  of  government  ofiicials,  manufacturers, 
traveling  notables,  and  foreigners,  who  had  heard  of  this  wonderful 
American  mechanic  and  came  to  see  his  work  for  themselves — to 
find  that  the  system,  the  machines,  and  the  tools  which  he  had  per- 
fected were  well  worth  the  journey.  His  innovations  in  the  manufac- 
ture of  arms  formed  as  great  an  epoch  in  mechanical  history  as  had 
his  invention  of  the  cotton  gin. 

Jigs  and  fixtures  were  among  his  equipment;  and  it  is  altogether 
probable  that  milling  machines  were  also  in  use,  since  he  must  have 
had  practical  knowledge  of  the  utility  of  the  milling  cutter  at  this 
time,  as  it  is  generally  assumed  that  the  first  practical  use  of  the  milling 
machine  was  in  the  making  of  parts  of  muskets. 

77 


10  MACHINE  SHOP  MANAGEMENT 

The  buildings  which  Mr.  ^Miitney  erected  for  his  use  were  sub- 
stantial stone  structures,  and  stand  in  a  part  of  the  city  called  in  his 
honor  "^^^litne}'^•ille."  They  form  a  part  of  the  extensive  plant  of  the 
Winchester  Repeating  Arms  Company. 

At  this  point  and  at  this  early  day,  therefore,  was  inaugurated 
the  modern  system  of  interchangeable  manufacturing — or  the  manu- 
facturing, in  large  numbers,  of  duplicate  parts,  within  such  a  limited 
degree  of  variation  as  to  admit  of  their  ready  interchangeability  with 
one  another.  The  system  was  not  one  that  would  be  confined  to  the 
manufacture  of  arms,  but  was  adaptable  to  the  production  of  all  kinds 
of  small  and  moderate-sized  machinery,  and  was  the  initial  effort 
which  in  due  time  revolutionized  the  then  existing  shop  methods, 
and  which  has  since  built  up  the  American  system  of  manufacturing 
to  the  proud  distinction  of  being  superior  to  anything  of  the  kind  in 
other  manufacturing  countries. 

In  the  operations  of  modern  manufacturing,  the  principal  object 
sought  is  to  turn  out  the  product  economically  and  accurately.  To 
produce  these  results  economically,  the  parts  must  be  produced  very 
rapidly.  To  produce  them  rapidly,  not  only  must  there  be  a  very 
complete  and  eflScient  equipment  of  machines,  attachments,  tools, 
jigs,  fixtures,  and  gauges  or  measuring  devices,  but  there  must  also 
be  a  very  complete  system  of  shop  methods  by  which  the  operation 
of  this  equipment  is  carried  on. 

It  has  been  well  said  that  "the  man  in  whose  brain  the  manufac- 
turing system  was  born  was  he  who  first  took  a  piece  of  scrap  iron 
and  drilled  two  holes  in  it,  to  guide  a  drill  in  making  another  piece 
with  two  holes  in  it  the  same  distance  apart  as  in  the  first  piece."  The 
men  who  now  fill  our  drafting  rooms  and  tool  rooms,  and  who  devise 
and  construct  tools  for  the  production  of  interchangeable  metal  parts, 
are  his  descendants.  They  have  made  possible  the  manufacture  of 
the  breech-loading  gun,  the  t}'pewTiter,  the  cheap  sewing  machine 
the  cash  register,  the  machine-made  watch,  the  automobile,  as  well  as  a 
thousand  and  one  other  mechanical  articles,  machines,  and  devices 
which  form  an  integral  part  of  our  twentieth-century  civilization. 

To  render  these  systems  efficient  and  economical  for  these  pur- 
poses, the  work  must  be  repetition  or  duplicate  work.  That  is,  there 
must  be  very  large  numbers  of  each  of  the  different  parts;  and  to  carry 
out  tJie  scheme  of  operation  for  the  division  and  subdivision  of  work, 

78 


MACHINE  SHOP  MANAGEMENT  11 

a  single  operation  on  a  large  number  of  parts  is  performed;  then  the 
work  is  handled  again,  perhaps  in  another  machine,  and  another 
operation  is  performed;  and  so  on  until  the  part  is  complete.  Thus 
a  piece  of  comparatively  simple  form  may  require  a  large  number  of 
separate  and  distinct  operations  to  complete  it.  But,  as  each  single 
operation  is  performed  by  one  operator,  he  may  give  his  undivided 
attention  to  the  accuracy  of  that  operation;  hence  very  accurate  work 
can  be  produced. 

In  the  development  of  these  systems,  the  work  has  continually 
grown  more  and  more  complex,  as  have  also  the  requirements  as  to 
the  buildings  in  which  manufacturing  work  is  performed,  and  as  to 
the  equipment  necessary  to  perform  it.  Conditions  have  been  con- 
tinually changing;  greater  speed  as  well  as  greater  accuracy  in  all 
machine  operations  has  been  demanded;  and  a  largely  increased  out- 
put per  employee  has  been  required.  So  great  and  urgent  has  been 
this  demand  that  the  employee  of  to-day  will  turn  out  from  three  to 
ten  times  the  volume  of  product  of  a  given  kind  that  he  did  only  a 
few  years  ago.  Undoubtedly  this  result  has  been  brought  about  in 
great  measure  by  the  great  improvement  in  machines,  tools,  and  fix- 
tures. Much  is  also  due  to  the  use  of  tools  composed  of  high-speed  steel ; 
still  more,  to  the  employment  of  improved  systems  for  handling  work. 

But  all  of  these  do  not  fully  explain  the  enormous  increase  in 
product  per  employee.  This  has  been  brought  about  by  various 
methods  of  shop  management.  One  of  these  is  the  specialization 
of  operations  and  the  division  and  subdivision  of  departments, 
whereby  each  operator  has  a  certain  well-defined  and  very  limited 
number  of  operations  to  perform.  These  operations  he  performs 
over  and  over,  hundreds  and  sometimes  thousands  of  times  daily, 
until  he  becomes  so  accustomed  to  each  movement  that  the  operations 
are  performed  not  only  with  great  rapidity  but  also  with  great  accuracy. 
Still  another  factor  in  the  question  of  individual  output,  is  the  efforts 
that  have  been  made  through  systems  of  premiums,  bonus,  and  similar 
methods  of  reward  for  individual  effort  when  the  output  reaches  or 
exceeds  a  certain  fixed  limit.  These  rewards  arc  not  confined  to  the 
operatives,  but  are  often  extended  to  the  foremen,  assistant  foremen, 
gang  bosses,  and  others  of  the  "non-productive"  force  who  have  in- 
direcdy  contributed  to  the  efficiency  of  individuals  and  hence  to 
departrap.ntal  efficiency. 

79 


12  MACHINE  SHOP  MANAGEMENT 

In  the  succeeding  articles,  these  matters  will  be  taken  up  and 
treated  in  detail,  giving  the  actual  practice  as  now  prevailing  in  some 
of  the  best  organized  manufacturing  plants. 

MACHINE  SHOP  MANAGEMENT 

Modem  Meaning  of  Shop  Management.  The  present  under- 
standing of  the  term  Shop  Management  is  quite  different  from  the 
sense  in  which  it  was  used  years  ago.  Formerly  the  management  of 
the  shop  was  vested  in  a  swperintendent  whose  duties  consisted  in  pur- 
chasing material,  inspecting  it  when  it  was  received,  turning  it  over 
to  the  foreman,  and  in  a  general  way  looking  after  the  work  as  it  was 
being  performed.  In  addition  to  these  duties,  he  frequently  handled 
the  selling  of  the  product,  the  collection  of  accounts,  and  the  proper 
provision  for  meeting  the  pay-roll  on  pay-days.  He  also  had  a 
general  supervision  over  the  grounds  and  buildings  and  their  care  and 
maintenance,  as  well  as  the  provision  for  power,  lighting,  and  heatiog^ 
By  this  arrangement  of  duties,  it  will  be  seen  that  comparatively  little 
time  was  devoted  to  actual  shop  operations,  and  much  time  to  different 
lines  of  duties  that  might  more  economically  and  often  quite  as 
efficiently  be  performed  by  assistants  at  a  much  lower  rate  of  pay. 

In  the  modern  methods  of  shop  management,  all  these  things 
are  changed.  The  specialization  of  workmanship,  the  division  of 
duties,  the  limiting  of  responsibilities — each  restricted  within  narrow 
limits  by  sharply  defined  regulations — ^have  reduced  the  variety  of 
operations  of  the  workman,  and  of  responsibilities  and  duties  of  the 
men  who  direct  manufacturing  work. 

We  find  the  purchasing  of  material  and  supplies  in  charge  of  a 
Purchasing  Agent.  We  find  these  purchases  checked  by  a  Receiving 
Clerk,  turned  over  to  a  Storekeeper,  and  subject  to  examination  by  a 
regular  Inspector.  They  are  then  put  into  the  store-room,  whence 
they  are  drawn  as  needed  for  the  different  departments,  the  foremen 
of  which  sign  definite  orders  for  such  kinds,  quantities,  and  qualities 
as  may  be  needed,  specifying  the  purposes  for  which  they  are  to  be 
used  or  the  particular  orders  to  which  they  are  to  be  charged.  Wlien 
issued,  they  are  receipted  for  by  the  person  receiving  them.  All  this 
is  conducted  with  the  same  regard  for  business  rules  as  if  the  foreman 
were  making  a  purchase  on  his  own  account  and  paying  for  the  goods. 
We  find  the  selling  of  the  product  in  the  hands  of  an  expert  Sales 

80 


MACHINE  SHOP  MANAGEMENT  13 

Manager,  often  assisted  by  a  corps  of  engineers,  draftsmen,  book- 
keepers, and  clerks,  numbering  more  persons  than  the  entire  factory's 
force  of  non-producers  twenty  years  previously,  A  Credit  and  Col- 
lection Department  attends  to  all  collections,  and  the  Treasurer  and 
Cashier  see  to  it  that  the  money  for  the  pay-roll  is  on  hand  when 
wanted.  A  Production  Engineer  regulates  the  volume  of  work  going 
into  the  shop,  and  the  sequence  of  mechanical  operations  by  which  each 
piece  or  part  is  to  be  machined  and  perfected.  An  assistant  to  the 
Superintendent  looks  after  the  condition  and  maintenance  of  grounds 
and  buildings,  yards,  and  the  transportation  facilities  of  the  plant. 

By  these  developments  of  the  system  of  management  into  a 
division  of  duties  and  responsibilities,  the  time,  attention,  and  abilities 
of  the  Superintendent  may  be  devoted  to  his  legitimate  purposes  of 
superintendence  or  supervision,  planning  and  directing  the  work  of  the 
assistants  and  heads  of  departments. 

A  Typical  Manufacturing  Plant.  For  the  purpose  of  taking  up 
the  question  of  Management  in  a  systematic  and  practical  manner, 
we  must  first  assume  that  we  have  a  shop  to  manage;  and  secondly, 
that  it  is  of  the  usual  type  of  manufacturing  plant  built,  organized, 
and  managed  at  the  present  day.  The  plan  of  such  a  plant  is  given 
in  Fig.  1. 

In  planning  a  plant  of  this  character,  provision  must  primarily  be 
made  for  the  various  departments  for  the  following  purposes : 

1.  An  Engineering  Department,  wherein  the  machines  forming  the 
product  may  be  designed  and  the  drawings  made  for  the  various  classes  of 
mechanics  who  are  to  perform  the  work  of  turning  out  the  product. 

2.  A  Pattern-Making  Department,  in  which  the  necessary  patterns  are 
made  for  use  in  the  foundry  for  producing  the  castings. 

3.  A  Forge  Shop,  capable  of  producing  such  forgings  as  are  required  in 
the  machinery  to  be  built. 

4.  An  Iro7i  and  Brass  Foundry,  in  which  may  bo  produced  the  rough 
castings  of  the  parts  that  are  to  enter  into  the  machines  constituting  the 
product. 

5.  Manufacturing  Departments,  in  which  all  parts  (large  and  small)  of 
the  product  are  made  from  the  rough  stock — such  as  castings,  forgings,  bar 
stock,  and  the  like,  to  the  completed  parts  ready  for  assembling. 

6.  Assembling  and  Erecting  Departments,  in  which  individual  parts  may 
be  assembled  into  groups  of  related  parts,  and  these  erected  into  complete 
machines. 

7.  A  Power  Plant,  containing  the  proper  equipment  for  furnishing  the 
necessary  power  for  driving  the  machinery  in  those  various  departments,  and 
for  providing  lighting  and  heating  faciliti(;s  for  the  plant. 

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MACHINE  SHOP  MANAGEMENT  15 

The  General  Ofpce  of  the  concern  is  of  course  understood;  but,  as  it  can- 
not properly  be  classed  with  departments  of  the  plant,  it  is  not  included  in  the 
above  enumeration. 

In  addition  to  the  above  list  of  principal  departments,  there  will 
be  the  following — quite  as  necessary,  but  secondary  in  importance: 

1.  The  Transportation  System,  including  shop  and  yard  tracks  and  cars, 
elevators,  cranes,  hoists,  and  all  similar  appliances  for  handling  material. 

2.  The  Tool  Room,  for  making  tools,  jigs,  and  fixtures,  and  for  properly 
storing  them  in  a  convenient  manner  for  issuing  when  they  are  called  for. 

3.  An  Experimental  Room,  which  all  progressive  concerns  find  neces- 
sary in  the  development  of  their  product. 

4.  The  Store-Room,  in  which  are  stored  the  raw  material  and  the  pur- 
chased stock,  either  partly  or  completely  manufactured,  which  are  issued  to 
the  different  departments  as  needed  for  their  daily  routine  work. 

5.  The  Finished  Parts  Store-Room,  in  which  the  smaller  parts  of  the 
product,  as  fast  as  they  are  completed,  are  stored  and  held  until  wanted  for 
the  process  of  assembling. 

6.  The  Pattern  Storage  Room.  In  this  department,  often  occupying 
several  floors  of  a  building  specially  constructed  for  this  purpose,  are  stored 
all  patterns  for  the  iron  and  brass  foundries,  and  also  those  sent  to  outside 
foundries  for  malleable  and  steel  castings. 

7.  The  Carpenter  Shop.  This  is  a  general  utility  department  making 
boxes  and  crates  for  shipping;  doing  carpenter  work  in  keeping  the  grounds 
and  buildings  in  proper  repair,  and  making  necessary  changes  therein;  making 
and  repairing  flasks  for  the  foundry;  and  similar  work. 

8.  The  Paint  Shop.  A  small  room  serving  little  more  than  as  a  store- 
room for  paints  and  painters'  materials,  as  their  work  is  principally  done  at 
various  points  in  the  shops,  wherever  the  machines  or  parts  may  happen  to  be. 

9.  The  Shipping  Room.  In  a  plant  building  large  machinery,  the 
shipping  room  is  simply  an  office  for  the  shipper,  the  physical  work  of  shipping 
being  done  in  the  shops,  wherever  the  machine  may  happen  to  be  at  the  time. 

Referring  to  the  plan  given  in  Fig.  1,  it  will  be  seen  that  the 
Administration  Building  is  placed  in  substantially  the  center  of  the 
front  line  of  the  plant.  The  first  and  second  floors  of  such  a  building 
are  usually  devoted  to  administrative,  commercial,  and  accounting 
purposes.  The  upper  floor  is  usually  occupied  by  the  Engineering 
Department  and  drafting  room. 

The  three  Manufacturing  Buildings  numbered  1,  2,  and  3  are 
devoted  to  the  various  operations  of  making  the  parts  of  which  the 
machinery  product  is  composed.  These  parts  are  then  sent  to  the 
Erecting  Building  (No.  4). 

The  system  of  shop  transportation  consists  primarily  of  shop 
tracks  and  cars,  and  is  extended  to  the  yard,  being  so  designed  as  to 
connect  all  buildings  of  the  plant  with  one  another  and  with  the  yard. 

83 


26  MACHINE  SHOP  MANAGEMENT 

It  also  reaches  the  railroad  tracks  at  numerous  points.  Overhead 
traveling  cranes  cover  the  manufacturing  buildings,  and  extend  into 
the  erecting  building  far  enough  to  form  a  connection  with  the  large 
traveling  crane  serving  it,  by  which  the  large  parts  of  machines  are 
carried  from  place  to  place  as  may  be  required  by  the  erecting  men. 
This  crane  serves  to  load  the  finished  machines  upon  the  railroad  cars, 
when  they  are  to  be  shipped,  the  railroad  track  being  extended  within 
the  building  for  this  purpose,  as  shown  in  Fig.  1. 

The  Tool  Room  is  given  as  central  a  location  as  possible,  and 
would  naturally  be  near  the  junction  of  building  No.  2  with  the  erect- 
ing building. 

The  Experimental  Room  has  no  particular  place,  but  is  fre- 
quently so  placed  as  to  be  away  from  the  active  manufacturing 
operations,  with  which  it  is  liable  to  interfere  if  too  closely  related. 

The  general  Store-Room  for  purchased  material  may  be  in  the 
erecting  building,  but  is  frequently  located,  for  convenience  of  com- 
munication, nearer  the  general  offices — as  for  instance,  in  front  of 
building  No.  1. 

The  smaller  parts  are  stored  in  a  Finished  Parts  Store-Room, 
usually  located  in  this  building.  Thence  they  are  issued  to  the  Assem- 
bling Department  as  required. 

The  Pattern  Shop  building  will  often  be  composed  of  three  floors. 
On  the  ground  floor  will  be  the  Carpenter  Shop  and  flask  making  and 
repairing  work.  On  the  second  floor  will  be  the  pattern-making  shop, 
and  on  the  third  floor  will  be  the  pattern  storage  rooms.  A  large 
eleVator  serves  all  three  floors. 

The  Paint  Shop  is  sometimes  located  in  one  of  the  manufacturing 
buildings  or  the  erecting  building;  but  as  the  painting  of  machine 
parts  and  complete  machines  is  generally  done  in  any  one  of  the 
departments  where  the  work  may  be,  and  the  paint  shop  is  hardly 
more  than  a  store-room  for  paints,  a  due  consideration  of  the  question 
of  fire  protection  would  indicate  that  it  had  better  be  placed  in  a  small 
building  entirely  detached  from  all  manufacturing  buildings. 

The  Power  House,  in  the  former  method  of  transmitting  power 
by  shafting  and  belting,  was  located  as  nearly  as  possible  in  the  center 
of  the  space  over  which  power  was  to  be  distributed.  Since  the 
advent  of  electricity  and  its  common  use  for  transmitting  power,  the 
question  of  the  location  of  the  power  house  is  relieved  from  this  con- 

84 


MACHINE  SHOP  IVIANAGEMENT  17 

dition;  it  may  be  located  at  the  point  most  convenient  to  railroad 
facilities  for  receiving  fuel,  or  for  obtaining  the  necessary  water  for 
boilers,  for  fire  purposes,  etc. 

In  a  plant  manufacturing  small  machines  or  a  kind  of  product 
which  is  shipped  in  small  quantities,  it  is  obvious  that  the  Shipping 
Room  must  be  convenient  to  the  point  from  which  these  goods  are  to 
be  taken  by  railroad  cars,  by  boat,  or  by  teams.  If  most  of  the  ship- 
ping is  of  large  machines  or  articles  which  must  be  handled  by  cranes, 
the  railroad  traclvs  will  be  run  into  the  erecting  building,  and  the 
machines  loaded  there,  in  order  to  avoid  the  expense  of  extra  handling 
and  moving  them.  This  is  the  arrangement  shown  in  Fig.  1.  In 
this  case  the  shipping  room  may  be  in  the  Administration  Building, 
so  as  to  be  convenient  to  the  other  office  departments.  In  some  kinds 
of  business  it  is  convenient  to  have  the  shipping  room  and  general 
store-room  near  each  other,  as  there  is  considerable  business  done  in 
each  that  is  quite  closely  related  to  the  other. 

The  Iron  and  Brass  Foundry  is  usually  located  at  some  distance 
from  the  manufacturing  buildings,  in  order  that  the  latter  may  be  as 
free  as  possible  from  the  annoyance  of  smoke  and  dust.  It  is  con- 
nected with  the  other  departments  by  the  system  of  shop  and  yard 
tracks,  and  the  railroad  siding  track  passes  through  one  end  of  the 
building  as  a  matter  of  convenience  in  shipping  castings.  There  is 
also  a  branch  track  running  along  the  side  of  the  foundry  building 
for  the  purpose  of  delivering  coke,  coal,  moulding  sand,  pig  iron, 
scrap  iron,  and  other  foundry  materials. 

It  should  be  noted  that  the  buildings  shown  in  the  plan  are 
located  in  a  compact  mass,  with  considerably  less  than  the  usual 
yard  room.  In  this  instance,  however,  the  plan  was  so  drafted  to 
economize  space  on  the  drawing.  It  is  the  law  in  some  European 
countries  that  not  over  50  per  cent  of  the  area  of  a  manufacturing  site 
shall  be  covered  by  roofs.  Such  a  law  would  be  of  much  value  in  this 
country,  to  prevent  the  crowding  of  buildings  to  such  an  extent  as  to 
be  unhealthful  to  employees. 

While  factory  buildings  are  frequently  erected  of  from  three  to 
to  six  floors,  the  modern  tendency  is  to  reduce  the  number  of  floors 
in  all  shops  and  manufacturing  buildings;  and  in  the  case  of  machine 
shops,  a  large  majority  of  them  are  built  of  only  one  floor.  Some, 
however,  have  wide  galleries  at  the  side,  by  which  considerable  second- 

85 


18  .ALVCHINE  SHOP  MANAGEMENT 

floor  space  is  added;  while  the  central  portion  remains  open  to  the 
roof,  and  suppUes  ample  space  for  the  accommodation  of  the  over- 
head traveling  crane,  as  well  as  the  necessary  added  height  needed  for 
erecting  large  machinery. 

Foundries  are  necessarily  built  of  a  single  floor,  although  there 
are  several  in  different  parts  of  the  country  where  moulding  rooms  are 
located  as  high  as  the  third  floor.  This  latter  arrangement  is  usually 
made  for  brass  moulding,  rather  than  for  iron  moulding. 

Organization  of  a  Manufacturing  Plant.  Having  the  design  of 
the  plant,  and  assuming  that  the  required  buildings  have  been  erected 
in  accordance  with  this  plan,  the  next  step  will  be  to  organize  the 
management  both  in  a  general  way  and  also  as  relates  to  the  various 
departments  usually  necessary  to  inaugurate  the  business  of  manu- 
facturing. 

As  the  scope  of  this  treatise  covers  only  the  shop  and  its  manage- 
ment, we  need  not  take  up  the  commercial  organization  of  the  com- 
pany by  which  it  is  capitalized  and  maintained.  We  shall  therefore 
consider  the  General  Manager  as  the  head  of  the  organization,  and 
proceed  to  examine  the  methods  usually  adopted  for  the  division  of 
authority  and  responsibiUties  from  him  to  the  actual  workmen  at  the 
bench,  at  the  machines,  and  on  the  floors. 

The  chart  shown  in  Fig.  2  illustrates  the  plan  of  the  organization. 
Nearly  all  minor  ofiicials  and  office  employees,  such  as  bookkeepers, 
clerks,  stenographers,  etc.,  are  omitted  from  this  chart,  to  avoid  con- 
fusion and  to  simplify  the  understanding  of  the  organization  plan 
and  its  numerous  details. 

The  General  Manager  has  a  personal  Assistant,  and,  for  his  com- 
mercial affairs,  the  service  of  a  commercial  Accountant  and  a  Cashier. 
Other  office  employees  are  similar  in  number,  duties,  and  responsi- 
bilities to  those  in  the  usual  commercial  office. 

By  referring  to  the  chart,  it  will  be  seen  that  the  organization  is 
divided  into  two  distinctly  different  parts.  First,  that  of  production 
or  manufacturing  proper;  and  second,  that  of  selling  or  marketing 
the  output  produced. 

In  this  case  the  production  division  is  by  far  the  most  numerous 
and  complex.  This,  however,  is  not  always  the  case — as,  for  instance, 
in  the  case  of  a  manufacturing  concern  selling  its  product  through 
local  agents.     Frequently  the  territory  over  which  sales  are  made  is 

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divided  along  state  lines,  and  a  District  Agent  appointed  for  each  state. 
These,  in  turn,  appoint  the  Local  Agents.  This  necessitates  an 
organization  of  hundreds  of  local  agents,  supervised  by  state  or  dis- 
trict agents,  and  these  in  turn  by  a  General  Agent.  Thus  a  very  large 
organization  is  built  up  for  disposing  of  the  product. 

Another  plan  is  the  employment  of  Traveling  Canvassers,  each 
having  a  certain  territory  to  cover,  who  make  their  reports  to  either 
state  or  district  agents,  or  to  the  general  agent  located  at  a  central 
point — sometimes  at  the  factory,  but  not  necessarily  so. 

As  competition  becomes  stronger  and  net  profits  smaller,  the 
problem  of  marketing  the  product  becomes  more  and  more  important; 
greater  and  more  complex  selling  organizations  are  necessary;  and 
the  expense  of  selling  increases.  The  advertising  organization,  or 
what  has  come  to  be  known  as  the  Publicity  Departme7it,  is  a  most 
important  adjunct  to  the  modern  manufacturing  business;  and  large 
amounts  of  money  are  annually  expended  in  its  maintenance. 

In  the  case  under  consideration,  the  selling  of  the  product  is  in 
charge  of  a  Sales  Manager,  who  has  as  his  ofiice  staff  the  Publicity 
Manager)  the  Preliminary  Engineer,3,nd  the  draftsmen  and  estima- 
tors who  assist  him;  the  General  Salesman,  who  is  in  reality  the  per- 
sonal assistant  to  the  Sales  Manager;  and  the  Credit  and  Collection 
Clerk. 

The  Publicity  Manager,  sometimes  called  the  Advertising 
Manager,  has  charge  of  all  advertising  of  whatever  kind,  demon- 
strations at  expositions  and  at  agencies,  and,  in  fact,  all  work  that 
may  be  properly  comprised  under  the  term  "publicity" — that  is, 
keeping  the  public  informed  as  to  the  product  of  the  company  and 
its  adaptability  to  meet  the  needs  of  the  public  in  the  special  lines  it 
manufactures. 

The  Preliminary  Engineer  is  in  charge  of  such  engineering  mat- 
ters as  are  necessary  upon  new  work,  or  work  upon  which  the  Sales 
Manager  desires  to  estimate.  It  frequently  happens  that  consider- 
able designing  and  drawing  are  necessary  in  this  connection,  previous 
to  definite  orders  being  given  or  contracts  signed.  It  often  happens 
that  the  product  of  the  concern  must  be  changed  in  certain  details 
so  as  to  adapt  it  to  the  uses  of  various  customers,  to  the  different  local 
conditions  under  which  it  is  to  be  used,  and  to  the  various  purposes 
for  which  it  is  to  be  used.    In  case  an  order  is  given  and  contracts 

88 


MACHINE  SHOP  MANAGEMENT  21 

signed,  the  preliminary  drawings  thus  produced  become  a  part  of  the 
transaction,  and  are  used  by  the  Production  Department  in  getting 
out  the  machinery  to  fill  the  order. 

The  purpose  of  the  Credit  and  Collection  Office  is  to  canvass  the 
financial  standing  of  customers  and  prospective  customers;  to  make 
collections  when  necessary  to  do  so;  and  generally  to  advise  the  Sales 
Manager  on  these  important  matters.  The  official  in  charge  of  this 
office  is  frequently  called  the  Credit  Man,  and  must  be  a  person  of 
peculiar  abil  ty  in  his  special  line  in  order  to  protect  the  concern  from 
fraud,  imposition,  and  financial  losses  when  dealing  with  customers 
of  commonly  unknown  or  doubtful  financial  ability  and  standing. 

The  Production  Division  is  under  charge  of  the  Factory  Manager, 
who  has  for  his  personal  assistant  a  Production  Engineer  or  Superin- 
tendent, who  plans  the  productive  scheme  of  the  factory  and  super- 
vises the  departmental  distribution  of  the  work  and  the  shop  opera- 
tions necessary  for  the  routine  work  upon  it.  In  a  large  manufacturing 
establishment,  the  Production  Engineer  will  be  at  the  head  of  a  con- 
siderable force  of  draftsmen  and  clerks  comprising  what  is  sometimes 
called  the  Planning  Department,  which  arranges  all  operations,  shop 
routine,  time  schedules,  premium  rates,  and  similar  matters.  The 
Factory  ]\Ianager  will  also  have  the  usual  office  assistants,  and  have 
direct  control  of  the  Purchasing  Department,  the  Time  and  Cost 
Department,  the  General  Store-Room,  and  the  Shipping  Room.  In 
some  concerns  the  Time  and  Cost  Department  is  a  part  of  the  Planning 
Department,  as  the  records  of  this  department  cover  nearly  every  kind 
of  information  required  for  the  Time  and  Cost  systems. 

All  other  departments  of  the  factory  are  divided  into  two  general 

classes.     The  first  comprises  the  general  departments,  as  follows : 

The  Engine:  ring  Department,  or  Drafting  Room. 
The  Experimental  and  Development  Department. 

The  Power  Plant,  for  both  the  generation  and  the  distribution  of  power. 
The  Iron  and  Brass  Foundries. 
The  Forge  Shop  and  Cutting-0£f  Rooms. 

The  Carpenter  Shop  (including  sometimes  the  Flask  Making  and  Re- 
pairing Departments). 

The  Paint  Shop  and  Painters'  Supply  Room. 

The  Transportation  Department  for  shops  and  yards. 

These  are  under  the  supervision  of  the  General  Superintendent^ 
who  has  charge  of  all  mechanical  matters  except  those  strictly  per- 
taining to  production  or  to  the  actual  manufacturing  of  the  jjroduct. 

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MACHINE  SHOP  MANAGEMENT  23 

The  second  general  class  is  that  of  Production,  and  will  ordinarily 
consist  of  the  following  departments: 

The  Planing  Department,  including  shapers  and  Blotters. 

The  Drilling  and  Boring  Department,  including  vertical,  horizontal,  and 
radial  drills  and  boring  machines. 

The  Heavy  Turning  Department,  including  lathes  of  less  than  24-inch 
swing. 

The  Milling  Machine  Department,  including  horizontal,  vertical,  and 
special  milling  machines,  profile  machines,  etc. 

The  Gear-Cutting  Department,  for  the  making  of  all  classes  of  gears. 

The  Grinding  Department,  including  cylindrical,  disc,  and  surface 
grinding. 

The  Polishing  Department,  which  includes  polishing,  buffing,  etc. 

The  Assembling  Department,  in  which  parts  (usually  comparatively 
small)  are  assembled  in  groups  of  related  parts  and  stored,  pending  the  final 
erection  of  the  machines. 

The  Erecting  Department,  in  which  the  entire  machine  is  erected  and 
usually  tested,  and  inspected,  receiving  the  final  painting  and  other  finishing 
work  ready  for  shipping. 

Should  the  character  of  the  product  be  such  as  to  require  it,  there  will 
b6  also  a  Plating  Department,  usually  located  adjoining  the  Polishing  Depart- 
ment. 

This  class  of  departments  will  be  under  the  direct  supervision  of 
the  Production  Swperintendent. 

Each  department  is  in  charge  of  a  Foreman,  who  is  responsible 
for  the  discipline,  the  work,  and  the  efficiency  of  the  force  under  him. 
Frequently  the  department  is  large  enough  to  require  one  or  more 
assistant  foremen.  Under  these  may  also  be  Gang  Bosses,  each  of 
whom  will  have  a  small  force  of  employees,  called  gangs,  for  whose 
work  and  efficiency  he  is  responsible. 

Shop  Management.  Referring  to  the  Chart,  Fig,  2,  it  will  be 
noticed  that  the  rectangular  figures  representing  different  offices, 
departments,  or  officials  are  connected  by  lines.  These  are  com- 
monly called  lines  of  authority,  and  a  careful  study  of  them  will  show 
in  what  manner  and  through  what  channels  the  orders  of  an  official 
pass  to  the  employees  for  whose  work  he  is  responsible. 

Tracing  these  lines  from  the  head  of  the  establishment  through 
the  various  offices  and  officials  to  the  difi'erent  departments,  we  get  a 
fundamental  idea  of  Sho'p  Management. 

This  system  will  be  rendered  somewhat  simpler  by  reference  to 
tlie  Chart,  Fig.  3,  which  shows  the  path  or  official  channel  of  com- 
munication and  authority  from  the  Superintendent  down  to  the  work- 

91 


24  MACHINE  SHOP  MANAGEMENT 

men.  It  also  emphasizes  the  fundamental  idea  of  all  oflScial  business 
passing  through  tlie  officials  in  charge  of  intermediate  departments. 

Thus,  if  the  Factory  Manager  desires  a  certain  thing  done,  he  does 
not  give  the  order  to  one  of  the  workmen,  nor  to  a  foreman,  but  to  the 
Superintendent.  The  Superintendent  will  give  his  orders  to  the 
foreman  of  the  department  wherein  the  work  is  to  be  done.  If  this 
is  a  department  in  which  there  are  gang  bosses,  the  Foreman  will  give 
his  orders  to  the  proper  gang  boss,  who  will  select  a  suitable  workman, 
or  as  many  of  them  as  may  be  necessary,  and  instruct  them  as  to  the 
work,  and  will  personally  see  that  it  is  performed  promptly  and  in  the 
proper  manner.  When  the  work  is  completed,  he  will  report  the  fact 
to  the  foreman,  who  will  in  turn  report  to  the  Superintendent,  who 
informs  the  Factory  Manager  that  his  orders  have  been  executed. 

This  process  may  seem  unnecessarily  complicated,  and  in  con- 
sequence it  is  sometimes  referred  to  as  red  tape.  It  is,  however,  neces- 
sary to  have  a  well-defined  and  properly  understood  system  and  chan- 
nel for  all  routine  business,  some  of  the  reasons  for  which  are  as 
follows : 

First — It  has  been  said  that  "no  man  can  serve  two  masters,"  and  this 
is  quite  true  in  all  questions  of  shop  management.  Every  loyal  workman  has 
learned  by  precept  and  tradition  to  look  to  his  immediate  superior  for  all 
orders  and  instructions  relating  to  his  work,  and  he  naturally  and  properly 
resents  any  attempt  to  ignore  or  belittle  his  legitimate  "boss." 

Second — As  the  efficiency  of  the  workmen  depends  to  a  great  extent  upon 
their  loyalty  to  the  management,  and  as  that  loyalty  can  be  secured  and  main- 
tained only  by  a  spirit  of  justice  and  fair-dealing  to  all,  including  officials  and 
workmen,  all  authority  and  responsibility  should  be  sharply  defined  aiid 
properly  limited,  to  the  end  that  the  business  and  work  may  proceed  in  an 
orderly  and  efficient  manner;  that  all  officials  and  workmen  may  know  when 
they  are  within  their  proper  limit  of  rights;  and  doing  their  duties  without 
fear  of  overstepping  their  due  bounds  or  interfering  with  the  rights  and  privi- 
leges of  their  fellows. 

Nearly  all  rules  are  subject  to  some  exceptions,  and  the  above 
have  theirs.  The  discipline  of  the  shop,  or  what  is  sometimes  referred 
to  as  the  police  regulations^  are  expected  to  be  enforced  by  all  officials 
ai  all  times. 

Two  of  these  exceptions  are  of  such  a  general  nature  and  applica- 
tion that  they  are  here  noted. 

First — Any  official  noticing  an  infraction  of  the  discipline  of  the  plant 
may  call  the  attention  of  the  employee  offending,  without  regard  to  the  depart- 
ment in  which  he  works,  and  require  him  at  once  to  cease  violating  the  rules. 

92 


MACHINE  SHOP  MANAGEMENT 


25 


But  the  official  should,  as  soon  a^  possible,  report  the  matter  to  the  head  of 
the  department  in  which  the  offending  employee  works. 

Second — Any  official  noticing  work  being  wrongly  done,  or  material 
wasted,  or  machinery  obviously  injured,  or  the  safety  of  the  workmen,  the 
building,  or  the  machinery  endangered,  may  peremptorily  order  the  action  to 
cease,  and  at  once  re- 
port the  fact  to  the 
head  of  the  depart- 
ment or  to  the  Su- 
perintendent, as  he 
may  judge  proper. 

Official  Com= 
munications.    For 

ordinary  commu- 
nications other 
than  General  or 
Special  O  r  d  er  s  , 
Production  Or- 
ders, letters,  etc., 
a  written  form 
should  be  habitu- 
ally used.  The 
u s  u  al  form  is 
shown  in  Fig.  4. 
These  forms  are 
put  up  in  pads  of 
alternate  sheets  of 
white  and  light- 
tinted  paper,  the 
former  being  per- 
forated at  the  top 
so  as  to  be  readily 
torn  out  while  the 
tinted  sheet  remains  fast  at  the  stub.  Both  sheets  are  printed  with 
the  same  form,  and  all  are  serially  numbered  in  pairs  of  one  white 
and  one  tinted  sheet.  Carbon  paper  is  used,  the  white  sheet  being 
written  upon  and  the  tinted  one  receiving  the  carbon  impression. 
Each  official  is  supplied  with  these  pads,  and  by  their  use  he  always 
retains  a  copy  of  any  memorandum  or  communication  he  makes  to 
another  official  or  department.  The  serial  numbers  are  intended  to 
aid  in  the  i:lentification  of  any  memorandum  that  may  have  become 


3 HOP   MEMORANDA 

5F.RIAI    NO.                                                   HATF. 

A 

RFFERWINS   TO 

-,.;;;■ 

Tn 

n^p'l" 

':■ 

) 

( 

f^ryxotA 

Fig.  4.    Form  for  Ordinary  Official  Communications. 
A  carbon  copy  is  made  on  tinted  pai)er. 


93 


26  MACHINE  SHOP  MANAGEMENT 

somewhat  illegible.  The  use  of  these  blanks  saves  any  misunder- 
standing that  might  occur  from  giving  and  receiving  verbal  orders; 
and  serves  to  prevent  errors  and  mistakes,  and  to  fix  the  responsi- 
bility for  their  occurrence  upon  the  party  in  error. 

Successful  Management.  The  spirit  of  shop  management  should 
always  be  a  spirit  of  leadership.  This  cannot  usually  be  obtained 
unless  the  manager  possesses  natural  ability  as  a  leader.  Successful 
military  chieftains  are  examples  of  this  condition.  They  lead  the  men 
instead  of  driving  them,  and  the  result  is  a  condition  of  enthusiastic 
loyalty. 

It  is  also  quite  as  necessary  that  a  leader  should  be  a  practical 
man  with  sound  technical  training  and  practical  experience  in  the 
business  which  he  undertakes  to  manage.  If  he  is  not  thus  equip- 
ped for  his  duties,  the  facts  soon  become  apparent  to  his  subor- 
dinates, and  his  reputation  suffers  accordingly.  The  workmen  lose 
confidence  in  his  leadership,  and  lack  enthusiasm  in  the  performance 
of  their  duties,  going  about  their  work  in  a  listless  and  perfunctory 
manner  that  is  very  detrimental  to  the  efficiency  of  the  plant. 

Still  another  quality  necessary  in  the  successful  manager,  is  the 
ability  to  judge  men  and  their  capacities  for  various  duties.  To  get 
always  the  right  man  for  the  position,  the  machine,  or  the  job,  is  a 
valuable  trait  in  any  man  who  is  to  direct  the  work  of  even  a  moderate- 
sized  establishment.  The  larger  the  plant  and  the  more  diversified 
the  business  carried  on  in  it,  the  more  valuable  and  indispensable  this 
characteristic  will  become.  The  manager  who  is  continually  or 
frequently  changing  his  subordinate  ofiicials,  and  consequently  pro- 
ducing changes  in  the  working  force,  will  always  find  his  duties  ardu- 
ous, and  will  also  find  it  well-nigh  impossible  to  get  the  plant  up  to  the 
degree  of  eflBciency  that  is  to  be  reasonably  expected.  The  volume 
of  output  will  continually  fall  below  the  normal  point,  and  the  quality 
of  the  work  will  also  deteriorate.  The  work  of  management  should 
be  a  constant  upbuilding  of  the  force,  and  of  development  and  educa- 
tion along  the  lines  of  advancement  in  the  special  output  of  the  con- 
cern. This  cannot  be  carried  on  if  the  composition  of  the  force,  or 
the  oflBcials  who  handle  it,  are  in  a  transition  state  of  change,  doubt, 
and  uncertainty. 

There  is,  on  the  part  of  many  oflBcials  having  charge  of  men,  a 
propensity  to  interfere  too  much  with  workmen  and  their  work:,  and 

94 


MACHINE  SHOP  ]\L\NAGEI\IENT  27 

thus  to  hinder  rather  than  help  them.  While  it  is  quite  true  that  every 
official  from  the  Gang  Boss  up  to  the  Factory  Manager  can,  at  various 
times,  help  the  workmen  in  their  allotted  tasks  by  timely  advice  and 
suggestions,  it  is  also  true  that  this  is  a  matter  that  can  be  easily  over- 
done, until  it  becomes  an  annoying  nuisance  and  unnecessarily  inter- 
feres with  the  men  in  the  discharge  of  their  legitimate  duties. 

Workmen  are  quick  to  discern  when  suggestions  and  advice  are 
well  meant  and  instructive,  and  when  they  come  as  a  kind  of  veiled 
criticism.  The  official  who  permits  himself  to  indulge  in  this  sort  of 
dictation  soon  falls  into  a  practice  of  nagging  that  is  most  exasperating 
to  the  men.  It  is  a  practice  that  first  weakens  and  then  destroys  the 
official's  influence  with  the  men,  who  obey  only  from  necessity. 
WTien  this  condition  exists,  the  working  efficiency  of  the  force  is  at  a 
very  low  ebb. 

On  the  other  hand,  really  helpful  advice  and  suggestions,  made 
in  a  cheerful  manner  and  from  a  quite  apparent  desire  to  assist  work- 
men, will  usually  meet  with  a  quick  and  loyal  response  that  argues 
well  for  the  efficiency  of  the  workmen. 

Another  point  on  the  road  to  success,  is  a  patient  and  interested 
listening  to  suggestions  that  workmen  have  to  make,  even  though  it  is 
on  trivial  matters.  It  should  always  be  borne  in  mind  that  the  work- 
man laboring  day  after  day  on  the  same  class,  and  often  on  the  same 
kind  of  pieces,  of  work,  is  in  a  position  to  discern  and  to  study  out 
many  minor  improvements  in  tools  and  methods  which  are  valuable. 
A  kindly  hearing  accorded  him,  the  adoption  of  such  suggestions  as 
are  practical,  with  some  substantial  reward  for  his  study,  will  en- 
courage not  only  him  but  other  workmen  to  study  their  work  and 
endeavor  to  find  better  and  more  efficient  ways  of  doing  it.  Thus  an 
active  and  interested  spirit  of  loyalty  is  brought  about  that  is  one  of 
the  most  valuable  assets  of  the  plant. 

The  successful  manager  is  he  who  is  enabled  to  unite  his  working 
force  of  subordinate  officials  and  workmen  in  a  complete  and  loyal 
organization,  all  working  for  the  common  good  and  for  the  success 
and  prosperity  of  the  concern.  Having  gained  this  condition,  the 
question  of  efficient  and  economical  manufacturing  is  practically  as 
well  as  theoretically  solved. 


95 


28  MACHINE  SHOP  MANAGEMENT 

SHOP  METHODS  AND  RECORDS 

From  the  principles  that  have  been  advanced  in  connection  with 
the  subjects  of  Manufacturing  and  Shop  Management,  it  will  be 
readily  seen  that  the  work  of  the  manufacturing  plant  of  the  present 
day  is  a  very  complex  matter,  and  there  must  necessarily  be  very  com- 
plete and  carefully  formulated  plans  and  systems  by  which  all  its 
operations  are  regulated,  and  a  somewhat  elaborate  plan  of  records 
by  which  these  operations  and  their  results  are  recorded  and  filed. 

In  formulating  the  necessary  plans  for  the  methods  and  records 
of  a  manufacturing  establishment,  we  must  first  determine  the  require- 
ments of  the  work  and  decide  definitely  on  what  we  wish  to  accom- 
plish. In  other  words,  the  conditions  must  be  first  examined  and 
analyzed,  their  various  factors  studied  at  their  true  value,  and  the 
requirements  determined,  so  that  a  general  plan  of  operations  may  be 
followed. 

These  methods  shall  cover  the  following  subjects: 

1.  The  selection  and  employment  of  workmen. 

2.  The  methods  of  keeping  the  time  of  all  employees. 

3.  The  manner  of  paying  workmen. 

4.  The  ordering  of  work  into  the  shops. 

5.  The  routine  of  passing  work  through  the  shops. 

6.  The  method  of  drawing  stock  and  materials. 

7.  The  ways  of  keeping  and  issuing  tools. 

Importance  of  Records.  Each  of  these  methods  will  become  a 
part  of  the  routine  of  the  establishment,  and  the  operations  carried 
on  under  it  will  be  proper  matters  for  regular  records  made  from  day 
to  day. 

Such  records  are  exceedingly  valuable  as  current  information, 
and,  when  properly  filed,  become  quite  as  valuable  for  reference  in  the 
future  as  for  use  in  current  operations. 

In  all  improvements  in  the  working  routine  of  manufacturing 
operations,  there  should  be  previous  records  by  which  the  present 
performances  may  be  checked  and  compared.  By  this  arrangement, 
it  is  comparatively  easy  to  ascertain  whether  or  not  any  improvement 
is  being  made,  and  in  what  direction  it  is  being  made.  This  knowl- 
edge will  suggest  further  plans  and  betterments.  Should  the  records 
prove  that  there  are  losses  rather  than  gains  being  made,  the  warning 
is  equally  valuable,  and  we  make  haste  to  better  results  and  greater 
eflBciency  in  the  work. 

96 


MACHINE  SHOP  MANAGEMENT 


29 


Thus,  whether  the  plans  and  methods  in  use  are  really  successful, 
or  quite  the  reverse,  it  is  of  the  utmost  importance  that  we  should 
know  by  prompt  and  accurate  records  just  what  the  results  are,  in 
order  to  keep  in  close  touch  with  the  progress  of  events,  and  that, 
when  plans  do  not  produce  the  favorable  results  expected  and  desired, 
the  information  may  be  promptly  available,  the  warning  be  heard,  and 
plans  altered  or  amended  until  they  bring  about  a  successful  routine 
in  the  manufacturing  operations. 

Selection  and  Employment  of  Workmen.  This  is  an  important 
matter,  since  it  costs  money  to  introduce  new  men  in  any  business, 


APPUCATION   CARD 


NAME 

ADDRES5 


DATE. 


A6E 


MARRILD 
SINGLE 


NATIONALITY 


WA6E5  ASKED 


EVER  EMPLOYED  HERE  ? 


LA5T  EMPLOYER 


KIND  OF  WORK 


WHEN 


PREVIOUS  EMPLOYER 


KIND  OF  WORK 


HAVE  BEEN  EMPLOYED 

FOR YtAR5 


KIND  OF  WORK  WANTED 


EMPLOYED 


Fig.  5.    Application  Card. 

and  requires  from  a  day  or  two  to  several  weeks  for  the  new  man  to 

become  sufficiently  accustomed  to  his  work  and  surroundings  to  be  of 

the  same  value  as  the  man  who  is  perfectly  familiar  with  the  shop,  the 

routine  and  methods  of  work,  and  the  foreman  under  whom  he  works. 

It  is  therefore  necessary  to  go  about  this  matter  in  a  methodical 

manner,  and  to  keep  records  of: 

(a)  All  persons  making  application  for  employment. 

(6)  All  persons  regularly  accepted  as  employees. 

(c)  Individual  records  of  all  regular  workmen. 

(d)  All  employees  who  leave  the  employment  of  the  company. 

To  accomplish  these  results,  the  official  whose  duty  it  is  to  employ 
men  will  fill  out,  or  will  have  a  clerk  fill  out,  an  Application  Card  of  the 
form  shown  in  Fig.  5,  for  each  person  applying  for  a  position.     It  will 


97 


30 


MACHINE  SHOP  MANAGEMENT 


be  noticed  that  it  is  important  to  know  whether  the  appHeant  has  ever 
been  employed  in  this  estabUshment  previous  to  the  present  appHca- 
tion.  If  so,  his. record  can  be  readily  referred  to  for  information  as 
to  the  desirability  of  employing  him  again.  It  is  also  necessary  that  the 
record  of  his  last  employer  be  known,  and  frequently  of  the  employer 
previous  to  the  last,  as  these  matters  will  also  be  taken  into  considera- 
tion in  determining  his  fitness  for  the  position  for  which  he  applies. 
It  is  also  necessary  to  know  how  many  years  he  has  been  employed  in 
manufacturing  establishments,  as  this  fact,  taken  in  consideration 


NAMF 

EMPLOYMErrr  card 

riATF 

ADDRESS 

A6E. 

MARRIED 
SINGLE 

NATIONALITY 

WA6E5  PER 

EVER  EMPLOYED  HERE  ? 

LAST  EMPLOYER 

KIND  OF  WORK 

WHEN 

BY  WHOM  HIRED 

KIND  OF  WORK 

DATE  TO  BEGIN  WORK 

FOREMAN 

APPROV 

:D 

SUPERIMTEMDEHT 

Fig.  6.    Employment  Card. 

"With  his  age,  will  frequently  furnish  information  upon  which  to  base 
judgment  as  to  his  fitness. 

The  Application  Card,  being  on  file,  is  available  for  the  use  of 
such  foremen  or  other  officials  as  may  be  in  need  of  workmen.  Should 
the  appUcant  be  decided  to  be  available,  after  consultation  between 
the  official  to  whom  application  was  made  and  the  foreman  desiring 
to  increase  his  force,  the  applicant  vdW  be  sent  for,  and  employed  at  a 
rate  mutually  satisfactory,  and  an  Employment  Card  of  the  form  shown 
in  Fig.  6  filled  out.  This  will  repeat  some  of  the  information  con- 
tained on  the  Application  Card ;  but  it  is  necessary  to  have  two  cards 
in  any  event,  as  the  information  must  be  filed  in  separate  drawers. 

The  Employment  Card  will  also  give  the  name  of  the  official 
employing  the  man,  as  well  as  that  of  the  foreman  under  whom  he  is  to 


98 


MACHINE  SHOP  MANAGEMENT 


31 


work,  the  kind  of  work  he  is  to  perfonn,  and  when  he  is  to  commence 
work.  It  will  also  require  the  approval  of  the  Superintendent  or 
Factory  Manager,  as  the  case  may  be,  to  make  it  valid  and  operative. 

The  appUcant  having  become  one  of  the  regular  employees  of  the 
concern,  a  third  card  is  made  out  for  filing  in  the  List  of  Employees 
drawer.  This  will  be  upon  the  form  shown  in  Fig.  7,  and  is  called  a 
Service  Card.  It  will  be  noticed  that  each  of  these  three  cards  is 
headed  with  the  name  and  address  of  the  person  whom  it  represents. 

The  Service  Card  gives  the  department  in  which  the  employee  is 
to  work,  the  kind  of  work  which  he  is  to  do,  the  date  he  begins  work, 


NAMF 

SERVICE    CARD 

ADDRES5 

DEPARTMENT 

KIND  OF  WORK 

DATE  BEGUN 

RATE 

PAY  RAISED 

PAY  RAISED 

PAY  RAISED 

TRANSFERS 

aurr 

REA50N 

Pig.  7.    Service  Card. 

ana  his  rate  of  pay.  Spaces  are  also  provided  for  noting  the  amount 
and  date  of  any  increases  in  his  rate,  and  for  the  record  of  a  transfer 
to  another  department  should  he  be  moved,  as  is  frequendy  the  case 
with  new  men  who  may  not  be  quite  adaptable  to  the  kind  of  work 
first  attempted,  but  entirely  satisfactory  at  some  other  class  of  work. 

A  space  is  also  provided  for  noting  the  date  of  the  workman's 
leaving  the  employ  of  the  company,  and  also  for  giving  the  reason  for 
it.  This  will  be  valuable  information  in  case  the  workman  should  sub- 
sequendy  apply  for  employment.  When  an  employee  leaves  the 
service  of  the  company,  his  Service  Card  is  removed  from  the  List  of 
Employees  drawer,  and  placed  in  a  fourth  drawer  labeled  Discharged 
or  Quit,  being  held  there  for  future  reference. 


99 


32 


IVIACIIINE  SHOP  MANAGEMENT 


Individual  Record  of  Standing.  In  many  well-conducted  manu- 
facturing establishments,  it  is  customary  to  keep  a  record  of  the  stand- 
ing of  the  men  as  rated  each  month,  as  a  valuable  reference  in  cases 
of  proposed  promotion,  increases  in  pay,  reliability  for  special  work 
and  positions  of  responsibility.  Various  methods  of  marking  the 
records  of  the  men  each  month  have  been  tried,  but  the  simplest 
method  is  to  use  the  number  100  for  perfect,  and  to  divide  it  as  follows: 

Good  workmanship 50 

Punctuality  in  reporting  for  work 30 

Deportment  during  working  hours 20 

Total 100 


INDIVIDUAL    RECORD 

NAMF                                                                                                                       NO 

YEAR 

MONTH 

MARK 

MONTH 

MARK 

MONTH 

MARK 

MONTH 

MARK 

JAN. 

•  AU&. 

JAN. 

Aue>. 

FE5. 

SEP 

FEB. 

5EP 

MCH. 

OCT 

MCK 

OCT 

APL. 

NOV. 

APL 

•  NOV. 

MAY 

DEC. 

MAY 

DEC. 

-  JUNL   ' 

TOTAL 

JUNE 

TOTAL 

JULY 

PERCENT 

•  JULY   ■ 

PERCENT 

Fig.  8.    Individual  Record  Card. 


Demerits  are  marked  off  as  to  workmanship,  by  the  foreman, 
according  to  his  judgment  aided  by  the  Inspector's  reports  of  the  work 
done  by  the  man. 

Punctuality  is  judged  by  the  number  of  times  late,  each  instance 
reducing  the  mark  by  one  unit.  'As  the  workman  enters  the  shop 
twice  a  day,  morning  and  afternoon,  assuming  26  working  days  in  the 
month,  a  practical  disregard  of  punctuality  soon  reduces  his  record 
in  this  respect  to  zero. 

Deportment  is  judged  by  the  Foreman,  who  also  takes  into  ac- 
count occasions  on  which  the  workman  may  have  been  reported  for 
violating  the  regulations  in  this  respect. 


100 


MACHINE  SHOP  IVIANAGEMENT  33 

A  Record  Card  is  shown  in  Fig.  8,  upon  which  monthly  records 
are  kept.  The  total  for  any  period,  divided  by  the  number  of  months 
covered  by  the  record,  will  give  the  percentage  o£  a  perfect  record. 
This  card  provides  for  a  record  for  two  years. 

If  it  seems  advisable  to  do  so  for  special  reasons,  a  similar  card 
may  be  formulated  covering  the  six  working  days  of  the  week.  A 
year's  record  in  this  form  may  be  entered  on  a  card  4  by  6  inches,  by 
arranging  the  horizontal  and  vertical  ruling  for  that  purpose. 

Such  a  record  may  be  profitably  kept  of  the  work  of  the  office 
force,  as  well  as  of  the  men  in  the  shops.  It  will  be  valuable  in  many 
ways  in  judging  of  the  availabiUty  of  the  men  for  special  work,  as  well 
as  for  promotion. 

Necessarily  such  records  should  be  very  carefully  kept;  otherwise 
there  is  liable  to  be  serious  injury  done  to  the  working  reputation  and 
integrity,  as  well  as  reliability,  of  the  men. 

The  Employment  Agent.  In  large  concerns,  an  official  is  regu- 
larly appointed  as  an  Employment  Agent,  and  it  is  his  duty  to  keep 
the  office  and  the  shops  supplied  with  competent  men  engaged  at 
reasonable  wages.  He  must  therefore  keep  in  close  and  accurate 
touch  with  the  labor  market,  for  the  same  reasons  that  the  purchasing 
agent  must  know  the  state  of  the  market  for  material  and  supplies. 
He  must  know  how  and  where  to  reach  workmen  of  the  different  classes 
whenever  he  is  called  upon  to  furnish  them. 

"While  ordinary  laborers  may  nearly  always  be  obtained  from  the 
daily  applications  made  at  the  office,  skilled  men  must  be  hunted  up; 
and  it  is  not  usually  easy  to  find  just  the  man  with  the  quahfications 
desired. 

When  men  are  wanted  for  positions  above  the  average  skilled 
workmen,  the  best  and  most  promising  will  be  nearly  always  distributed 
among  the  present  employees  who  are  deserving  of  advancement.  To 
promote  one  of  them,  rather  than  hire  some  man  from  outside  the 
organization,  is  usually  good  business  policy.  The  man  and  his 
abilities  are  generally  well  known,  while  a  stranger  is  always  an  un- 
known quantity.  The  men,  being  acquainted  with  the  man,  will  be 
pleased  to  see  him  get  the  deserved  promotion;  and  it  is  always  wise 
to  consider  the  popularity  of  proposed  orders  affecting  the  working 
force.  The  man  himself  will  feel  his  added  responsibilities  much 
more  than  an  outside  man  will,  and  will  generally  work  harder  to  suc- 

101 


34  .MACHINE  SHOP  MANAGEMENT 

ceed  in  his  new  position.  Therefore  it  is  always  best  to  give  the  first 
chance  to  present  employees  who  have  been  faithful  to  the  responsi- 
bilities thus  far  placed  upon  them. 

It  will  be  found  that  in  most  of  the  departments  there  are  em- 
ployees who  from  one  reason  or  another  are  doing  work  quite  below 
their  real  capacity,  hoping  that  later  on  there  may  be  better  oppor- 
tunities for  the  coveted  position.  The  Employment  Agent  should  know 
the  men  of  the  force,  and  their  abilities,  so  as  to  take  advantage  of  these 
conditions.  A  man  may  be  needed  by  a  foreman  in  one  department 
who  is  not  aware  that  in  a  neighboring  department  may  be  just  the 
kind  of  man  he  wants.  The  Employment  Agent  should  know  where 
to  find  the  man  at  once. 

Again,  one  department  may,  from  the  conditon  of  the  work,  be 
short  of  help,  and  may  request  the  Employment  Agent  to  hire  a  certain 
number  of  men  of  certain  qualifications  and  abilities.  At  the  same 
time,  there  may  be  another  department  in  which  there  are  more  men 
than  can  be  used  to  advantage.  An  arrangement  for  the  temporary 
or  permanent  transfer  of  some  of  these  men  will  be  a  great  help  to  both 
departments,  and  will  have  the  added  advantage  of  keeping  good  men 
permanently  employed. 

If  a  workman  feels  that  his  employment  is  permanent,  and  that 
there  are  fair  opportunities  for  advancement,  this  will  be  the  surest 
way  to  hold  him  faithful  and  loyal  to  the  interests  of  the  establishment; 
and  the  conditions  that  bring  about  this  condition  of  mind  in  him  will 
also  draw  other  good  men  who  will  be  glad  to  be  counted  as  among  those 
faithful  to  a  company  which  appreciates  their  services  and  which  will 
look  to  their  interests  as  they  consider  those  of  their  employers.  The 
result  will  be  that  these  men  will  give  their  best  services,  and  even  be 
on  the  alert  to  further  the  interests  of  the  employer  who  has  favored 
them.  Thus  a  strong  working  organization  is  built  up,  which  becomes 
one  of  the  best  and  most  valuable  assets  of  the  company. 

Time  Keeping.  As  cost  of  labor  is  usually  greater  than  any  other 
in  the  manufacturing  plant,  and  frequendy  greater  than  all  other 
factors  in  the  cost  of  manufacturing,  it  is  very  important  that  the 
records  pertaining  to  this  expense  be  properly  planned  and  accurately 
kept. 

Various  methods  have  been  adopted  and  used  for  this  purpose. 
Some  of  the  more  prominent  plans  will  be  given.     They  are  each 

102 


MACHINE  SHOP  MANAGEMENT 


35 


adapted  to  some  certain  kind  or  class  of  work,  and  it  will  often  be 
found  that  in  practice  still  different  forms  must  be  devised  in  order  to 
meet  the  existing  conditions. 

There  are  three  methods  of  recording  the  time  of  employees — 
namely : 

1.  By  entering  the  time  in  a  book  or  upon  cards,  by  a  Time-Keeper. 

2.  By  entering  the  time  upon  cards  by  the  workman  himself. 

3.  By  stamping  the  time  upon  cards  by  the  workman  in  a  time-recording 
clock. 

The  first  of  these  methods  is  the  oldest  form,  and  has  now  to  a 

great  extent  gone  out  of  use. 


DATE. 

ORDER  MO. 

W0RKMAK5HO. 

MACHlHt  HO. 

PATTERN 
MAKING- 

PATTEPN 

REPAIR5 

FOUNDRY 
REPAIRS 

EQUIPMENT 
REPAIRS 

GENERAL 
OFFICE 

DEP'T 

qUAMTlTY 

DESCRIPTION   OF  WORK  OONL 

DRAFTIH6 
ROOM 

TOOL 
ROOM 

TIME  STARTED 

FOREMAN'S  APPROVAL 

HOURS 

RATe 

VALUe 

TIME  3TC 

)Wt 

0 

J 

Fig.  9.    Pattern  Shop  Time  Card. 

A  large  majority  of  the  work  of  a  manufacturing  plant  re- 
quires that  the  time  worked  by  the  employees  shall  be  registered 
twice.  That  is,  one  entry  shall  be  of  the  day  time  (time  paid  for  by  the 
day),  which  necessitates  the  recording  of  the  total  number  of  hours 
worked  each  day;  the  second  entry  shall  record  the  job  time  (the  time 
worked  upon  the  different  jobs  during  the  day).  Tt'his  second  entry 
is  sometimes  called  Ti7ne  Distribution,  since  the  employee's  time  is 
distributed  over  the  different  jobs  upon  which  he  has  worked. 

Time=Card  Forms.  This  work  is  sometimes  done  by  means  of 
time  cards  as  shown  in  Figs.  9,  10,  11,  and  12,  which  are  given  as 
characteristic  examples  of  these  methods.  These  cards  are  of  dif- 
ferent tints  as  a  convenient  method  of  recognizing  them. 

103 


36 


MACHINE  SHOP  MANAGEMENT 


kers 


Fig.  0  is  yellow,  and  is  used  in  the  Pattern  Shop. 
Fig.  10  is  chocolate-colored,  and  is  used  in  the  Forge  Shop. 
Fig.  11  is  blue,  and  is  used  by  the  Carpenters  and  Flask  Ma- 
Fig.  12  is  white,  and  is  used  in  the  Machine  Shop. 


DATE 

ORDER  MO. 

WORKMAH'SNO. 

^W0^1NE  NO. 

AririEALm& 

STRAIGHTO 

TEMPERINQ 

CUTTINa  OFF 

CASE 
HABOENINQ 

CUT  B0LT5 
a)  TAP  NUTS 

OEP'T 

QUANTITY 

OEiCRIPTlON  OF  WORK  DONE 

FOROlNCi 

5HfilNKIN6 

WCLOING 

TOOL  WORK 

TIME.  STARTED 

F0REMAN\5  APPROVAL 

M0UR5 

RATE 

VALUE 

, 

TIME  STOPPED 

Fig.  10.    Forge  Shop  Time  Card. 


DATE 

ORDER  NO. 

vyoRKMAttsna 

MACfBNEtia 

FLASK 
MAKING 

BOXING 

CARPEN- 
TERING 

5HIPPINC1 

BUILOINCi 
REPAIRS 

OEPT 

QUANTITY 

DESCRIPTION   OF  WORK  OOME 

EQUIPMENT 
REPAIRS 

TIME  STARTED 

FOReMAN'S  APPROVAL 

HOURS 

RATE 

VALUE. 

TIME  5T0PPED 

Fig.  11.    Time  Card  for  Carpenters  and  Flask  Makers. 

Similar  card  forms  may  be  devised  for  any  other  department  of  a 
plant,  or  for  the  departments  of  plants  doing  entirely  different  work. 

104 


MACHINE  SHOP  MANAGEMENT 


37 


When  these  cards  are  used  as  a  means  of  distributing  the  time  to 
the  various  jobs  or  orders  in  force  in  the  shop,  the  day  time,  from  which 
the  pay-roll  is  made  up,  is  usually  recorded  on  a  strip  of  paper  in  a 
time  clock,  the  operation  being  performed  by  each  employee  as  he 
passes  into  the  shop  morning  and  afternoon,  and  when  leaving  at 
noon  and  night.  Passing  to  the  clock,  the  workman  swings  a  lever 
to  his  individual  number,  and  presses  in  a  knob,  whereby  the  exact 
time  of  the  operation  is  recorded  upon  a  slip  of  paper,  a  ribbon,  or  a 
disc  within  the  clock. 

In  other  forms  of  time  clock,  an  individually  numbered  key  is 
inserted  in  one  of  the  individually  numbered  holes,  turned  around,  and 


DATE 

ORDER  Na 

WORKJWi'SNO. 

MACHINE  NO. 

TURNING 

FILING  AND 
FITTIMO 

■" 

PLAN1N6 

straight'mg 
ajcuniMaoFF 

5PLmiNG 

ERFCTINQ 

OEPT 

QUANTITY 

OESCRIPTION   OF  WORK  DONE 

FLUTING 

TAPPIMQ  a> 
ORIUINGr 

BALANCING 

QRINDINQ 

MtLLtNG 

SCREWMTY 

CHUCKING 

BORINS 

MBBrTTm& 

ASSEMBLlriG 

TOOL  WORK 

TIN- 
SMITMINQ 

TIME  5TARTED 

FOREMAN'S"  APPROVAL 

HOURS 

RATE 

VALUE 

TIME   STOPPED 

Fig.  13.    Machine  Shop  Time  Carfl. 

withdrawn.  The  time  is  recorded  in  a  manner  quite  similar  to  that 
used  in  the  case  just  described  above. 

The  four  forms  for  time  cards  shown  are  quite  similar,  the  differ- 
ence being  in  the  list  of  operations  given  at  the  right-hand  end  of  the 
card. 

At  the  top  of  the  card  are  spaces  for  the  date,  order  number, 
workman's  number,  and  the  number  of  the  machine  upon  which  he 
works  (provided  the  work  is  done  on  a  machine).  In  the  next  space, 
the  name  of  the  department  is  given.  This  is  followed  by  spaces  for 
the  quantity — that  is,  the  number  of  pieces,  feet,  or  inches  of  such 
material  as  is  designated  in  this  way,  or  the  number  of  pounds  in 
weight  of  the  material.     Then  comes  a  brief  description  of  the  work. 

105 


38  AUCHINE  SHOP  MANAGEISIENT 

Opposite  each  of  these  is  a  square  in  which  the  workman  can 
indicate  the  particular  kind  of  work  he  has  been  doing,  by  marking 
an  X.  Thus  the  form  shown  in  Fig.  9  contains  the  following  classes 
of  work — namely,  Pattern  Making,  meaning  new  pattern  work; 
Pattern  Repairs,  referring  to  repairs  charged  to  the  job;  Foundry 
Repairs,  or  repairs  to  patterns  or  fixtures  the  expense  of  which  is  to  be 
charged  to  the  Foundry  Department;  Equipment  Repairs,  referring 
to  pattern  shop  equipment;  General  Office,  consisting  of  small  jobs 
of  equipment  and  maintenance  that  are  better  done  by  a  pattern  maker 
than  by  a  carpenter;  Drafting  Room,  similar  new  work  and  repairs, 
such  as  drafting  boards,  angles,  etc.;  Tool  Room,  similar  work 
chargeable  to  this  department,  such  as  boxes  or  cases  for  special  tools, 
and  work  not  entrusted  to  a  carpenter. 

Whatever  may  be  the  kind  of  work  the  employee  is  engaged 
upon,  he  checks  it  as  described;  and  after  the  words  "Time  Started," 
he  notes  the  hour  and  minute  he  begins  work.  "When  the  job  is 
completed,  he  notes  the  time  after  the  words  "Time  Stopped." 
The  elapsed  time,  the  rate,  and  the  value  are  filled  in  by  the  time 
clerk. 

This  card  is  turned  in  to  the  foreman  or  dropped  in  a  box  pro- 
vided for  that  purpose,  it  having  been  approved  by  the  foreman  of 
the  department  in  which  the  work  is  done.  It  then  goes  to  the  time 
clerk. 

As  each  workman  has  a  card  for  each  different  job  and  for  each 
day,  it  follows  that  all  the  job  cards  for  a  single  day  must  aggregate 
the  same  amount  of  time  as  that  indicated  on  the  stamped  record 
within  the  recording  time  clock.  Discrepancies  of  this  kind  are  in- 
vestigated, and  the  time  distribution  readjusted  until  satisfactory,  the 
foreman  of  the  department  usually  being  consulted  in  the  case. 

Recording=Clock  Time=Cards.  Recording  time  clocks  are  also 
made  which  operate  automatically  to  produce  changes  in  the  position 
of  the  card  dropped  into  a  receptacle  provided  for  the  purpose,  such, 
that  when  a  lever  is  manipulated,  not  only  is  the  exact  hour  and 
minute  stamped  upon  the  card,  but  it  is  stamped  in  its  proper  place 
upon  the  card  so  as  to  correspond  with  the  proper  day  of  the  week  and 
also  indicate  whether  forenoon  or  afternoon.  The  horizontal  changes 
of  position  are  made  by  hand,  previous  to  manipulating  the  operating 
lever. 

106 


MACHINE  SHOP  MANAGEMENT 


39 


WEEK  END1M6 

1 

90 

NO 

NAME 

DAY 

m 

OUT 

LOST  OR 
OVERTIME. 

TOTAL 

IN 

OUT 

M 

A.M. 

P.M. 

T 

A.M. 

P.M. 

W 

A.M. 

P.M. 

T 

A.M. 

P.M. 

F 

A.M. 

PM.. 

5 

A.M. 

PM. 

5 

A.M. 

RM. 

TOTAL  TIMF                                                 HPS. 
RATF 

TOTAL  WAGf.S.  l^OR  VVFFK    it 

Fl 

K-  13. 

Dny  Tlr 

no  Card 

* 

TH15  51DE  OUT 


NO.  105 

NAME 


P'Ig.  U.    }3ackof  ]>:iy  TimoCard. 


107 


40 


MACHINE  SHOP  MANAGEMENT 


ORDER  Nf^ 

PATF 

1 

EMPLOYEE  N^                                               ' 

MACHINE  NO. 

ARTICLE. 

OPERATION. 

DAY 

Its 

OUT 

iN 

OUT 

TOTAL 

F 

A.M. 

P.M. 

S 

AM. 

P.M. 

S 

A.M. 

P.M. 

M 

A.M. 

P.M. 

T 

A.M. 

P.M. 

W 

A.M. 

RM. 

T 

A.M 

P.M. 

TOTAL 

RATE 

HOURS                                  MIN. 

AMOU^ 

iT 

Fig.  15.   Job  Time  Card. 


A  form  for  a  regular 
Day  Time  card  is  shown 
in  Fig.  13.  The  days  of 
the  week  are  given,  and 
each  divided  by  horizon- 
tal Hnes  into  spaces  for 
forenoon  and  afternoon. 
Vertically  the  dividing 
lines  divide  spaces  for  the 
time  the  workman  comes 
IN,  goes  OUT,  and  for 
similar  records  for  lost 
time  or  .overtime,  as  the 
case  may  be. 

At  the  top  of  the  card 
is  thedate, generally  given 
as  the  last  day  of  the  week 
for  which  time  is  made 
up.  This  is  followed  by 
the  number  and  name  of 
the  employee.  Following 
the  table  prepared  for  the 
time  stampings,  is  a  space 
for  the  total  time,  the 
rate,  and  the  amount  due 
for  the  week. 

The  back  of  the  card 
is  shown  in  Fig.  14,  and 
is  plain  except  at  the  top, 
which  is  printed  in  large 
and  plain  type  "This  Side 
Out,"  as  employees  are 
liable  to  introduce  the 
card  with  its  face  out- 
ward. For  convenience 
the  employee's  number 
and  name  are  give  on  this 
side  as  well  as  on  the  face. 


108 


MACHINE  SHOP  MANAGEMENT  41 

By  the  above  method  of  time  recording,  all  employees  will  use 
the  regular  Day  Time  card.  Such  employees  as  work  on  the  regular 
production  orders,  and  on  work  properly  chargeable  to  them,  will  in 
addition  to  the  Day  Time  card  use  a  Job  Time  card,  of  the  form  shown 
in  Fig.  15.  This  card  is  provided  with  spaces  at  the  top  for  the  order 
number,  date,  employee's  number,  machine  number,  article  or  piece 
upon  which  the  work  is  being  done,  and  the  name  of  the  operation 
that  is  being  performed.  The  body  of  the  card  has  the  same  spaces 
for  the  recording  stampings.  It  will  be  noticed  that  the  card  shown 
in  Fig.  13  runs  from  Monday  to  Sunday,  inclusive.  This  is  the  usual 
form,  but  in  some  shops  the  fiscal  week  ends  on  different  days  of  the 
week.     In  the  job  card  shown  in  Fig.  15,  it  ends  on  Thursday. 

In  the  use  of  these  job  cards,  a  card  is  made  out  for  each  job  oJ 
order,  without  regard  to  the  number  of  different  jobs  an  employee  may 
have  in  a  day.  The  aggregate  of  the  time  shown  on  all  these  cards 
for  a  day  must  aggregate  the  amount  shown  on  the  day  time  card  from 
which  the  pay-roll  is  made  up.  Thus  each  card  acts  as  a  check  on 
the  other,  and  accuracy  is  insured  to  a  considerable  degree. 

When  the  work  for  which  the  job  time  is  issued  has  been  com- 
pleted, and  the  card  receives  its  final  stamping,  it  may  be  turned  over 
to  the  foreman,  who  will  send  it  to  the  Time  Clerk.  This  gives  the 
foreman  an  opportunity  to  look  it  over  and  correct  any  mistakes  that 
may  have  been  made.  In  some  shops  the  card  is  dropped  into  a  box 
marked  Job  Time  Cards — Completed,  whence  it  is  gathered  up  with 
others,  by  the  Time  Clerk.  Coming  into  the  possession  of  the  Time 
Clerk,  he  will  check  it  up,  together  with  such  others  as  the  workman 
may  have  used  on  the  same  day,  in  order  to  ascertain  if  the  total  time 
on  the  job  cards  for  the  day  equals  that  shown  on  the  day  time  card. 

When  the  Time  Clerk  has  compared  the  cards,  he  will  send  the 
job  cards  to  the  Cost  Clerk,  who  will  enter  the  amounts  in  a  Job  Time 
Summary  book  of  the  form  shown  in  Fig.  16.  On  this  blank,  the 
number,  name,  and  rate  of  each  man  are  written.  The  succeeding 
columns  are  headed  with  the  various  current  order  numbers.  Entries 
are  made  opposite  the  man's  name,  of  the  pay-roll  value  of  the  time 
he  has  worked  on  the  various  orders  or  jobs  for  the  day.  The  total, 
carried  out  in  the  extreme  right-hand  column,  represents  his  pay  for 
the  day.  The  totals  at  the  bottom  of  the  job  columns  represent  the 
value  of  the  time  spent  on  each  order,  for  the  day.     The  work  is 

109 


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110 


MACHINE  SHOP  JMANAGEMENT  43 

checked  as  correct  when  the  sum  of  all  the  totals  of  the  right-hand 
column  is  exactly  equal  to  the  sum  of  all  the  totals  at  the  foot  of  the 
columns. 

The  entries  in  this  book  are  made  by  quite  young  clerks,  who 
handle  only  these  job  cards  and  books  as  their  daily  tasks,  and  who 
become  very  expert,  accurate,  and  rapid  at  this  work.  The  totals  are 
carried  by  the  Cost  Clerk  or  one  of  his  assistants  to  the  cost  ledger,  in 
which  the  costs  of  both  labor  and  material,  as  well  as  all  expense 
charges,  are  brought  together.  Sometimes  this  work  is  done  upon 
cards,  each  one  representing  an  order  and  containing  in  brief  and  con- 
densed form  all  the  charges  of  whatever  kind  made  against  the  order. 

Methods  of  Paying  Employees.  The  methods  by  which  pay-rolls 
are  made  up  and  the  employees  paid,  are  important;  and  whatever 
plans  are  adopted,  they  should  realize  the  following  desirable  re- 
quirements : 

1.  The  record  of  amounts  due  the  men  should  be  absolutely  accurate 
and  in  accordance  with  the  rates  at  which  the  men  were  employed,  subject  (a) 
to  such  modifications  as  may  be  made  by  reason  of  properly  authorized  changes 
in  rate;  {h)  to  such  modifications  as  may  be  made  from  week  to  week  by  over- 
time-work,  or  by  the  operation  of  methods  of  "piece  work,"  "premium  work," 
or  any  of  the  several  plans  for  rewarding  exceptionally  efficient  work;  (c)  to 
Buch  deductions  as  may  properly  be  made  on  account  of  advance  payments 
that  have  been  made  upon  due  authority. 

2.  The  methods  of  making  up  the  pay-roll  and  paying  the  men  should 
secure  promptness  in  this  work,  so  that  the  pay  of  the  employees  may  not  be 
held  back  for  an  unreasonable  length  of  time  pending  the  necessary  clerical 
work. 

3.  The  methods  of  payment  should  be  such  that  no  workman  can  know 
the  amount  paid  to  any  other  workman. 

To  accomplish  the  results  desired  in  the  first  requirement,  if  the 
amounts  due  the  men  are  made  up  from  the  time  recorded  by  the  men 
themselves — that  is,  in  a  recording  clock — is  a  comparatively  easy 
task,  since  it  is  principally  a  matter  of  mathematics,  with  a  strict 
attention  to  details. 

Changes  in  rate  of  pay  do  not  usually  take  effect  until  the  week 
following  that  in  which  the  order  is  given.  This  order  will  be  in  the 
form  of  a  request  by  the  foreman  of  the  department  in  which  the  work- 
man is  employed,  stating  the  reasons  for  the  increase.  This  is  sent 
to  the  Superintendent  or  Factory  Manager  for  approval.  If  approved 
it  is  then  sent  to  the  Pay  Clerk,  who  files  the  notice  for  future  reference 
and  makes  the  required  change  on  his  pay-roll. 

Ill 


44  MACHINE  SHOP  MANAGEMENT 

Premium  work  rates  will  be  made  up  by  the  foremen  of  the 
departments,  and  approved  by  the  Superintendent,  in  smaller  shops. 
In  large  plants  the  rates  will  be  made  up  by  a  clerk  in  the  Production 
Department,  and  approved  by  the  Production  Engineer.  In  either 
case  they  will  be  sent  directly  to  the  Pay  Clerk. 

Advances  to  men  will  be  made  only  in  special  cases,  upon  a  written 
request  from  the  foreman,  stating  the  reasons  and  approved  by  the 
Superintendent. 

The  second  requirement  can  be  met  by  having  the  time  cards  of 
the  style  used  in  recording  clocks  (as  shown  in  Figs.  13, 14,  and  15). 
The  convenience  and  rapidity  of  making  up  the  time  of  these  cards  is 
apparent  from  the  fact  that  the  record  of  the  entire  week  is  contained 
upon  the  face  of  one  day  time  card,  lost  time  being  checked  only  in 
red  ink  in  the  total  column  at  the  right,  and  the  sum  of  the  amounts  of 
lost  time  being  subtracted  from  the  regular  working  time  for  the  week 
Thus,  if  the  working  time  is  55  hours  per  week,  and  the  lost  time  was 
^  hour  one  day  and  j  hour  another,  making  f  hour,  we  subtract  that 
from  55,  leaving  54|  hours  as  the  time  for  the  week.  This  is  much 
more  rapidly  done  than  to  carry  out  the  total  time  for  each  day  and 
add  up  these  totals  for  the  six  days  of  the  week. 

The  P ay-Roll  Sheet  or  P ay-Roll  Book  is  shown  in  Fig.  17.  This 
is  now  frequently  made  as  a  loose  sheet  or  such  number  of  sheets  as 
may  be  necessary  to  contain  all  the  names,  frequently  as  many  as 
50  names  on  the  sheet.  Upon  examination  of  this  printed  form,  it 
will  be  seen  that  the  regular  time  is  divided  into  productive  and  won- 
productive  labor.  This  is  for  the  purpose  of  ascertaining  what  portion 
of  the  labor  is  applied  directly  upon  the  product,  and  what  portion 
is  applied  indirectly,  such  as  foreman,  clerks,  general  laborers,  etc., 
whose  work  is  classed  as  non-productive. 

The  amount  of  the  regular  time  is  computed,  and  entered  in  the 
column  headed  Amount.  If  there  is  an  amount  due  in  premiums,  it 
is  entered  in  the  next  column,  and  the  two  amounts  added  in  the  column 
headed  Total  Amount.  In  the  next  column  is  entered  the  amount  of 
any  advances  that  may  have  been  made,  which  is  deducted  from  the 
total  amount,  leaving  the  net  Amount  Due,  which  is  entered  in  the  next 
column.  This  amount  is  paid  over  to  the  employee,  who  signs  his 
name  in  the  space  under  By  whom  received,  and  the  operation  is  com- 
plete.    The  men's  numbers  are  placed  at  the  extreme  left  hand  and 


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113 


46  IMACHINE  SHOP  MANAGEMENT 

right  hand  of  the  form  as  a  matter  of  convenience  in  rapidly  han- 
dling the  work  of  paying  off. 

'When  the  pay-roll  has  been  completely  made  up,  it  is  submitted 
to  the  Superintendent,  who  certifies  as  to  its  being  a  correct  list  of 
men  actually  employed,  and  to  the  rates  of  the  different  men.  It  is 
then  submitted  to  the  Factory  Manager  for  approval.  After  the 
amounts  due  the  men  are  actually  paid  and  receipted  for,  the  Treasurer 
certifies  the  fact,  and  the  pay-roll  becomes  a  voucher  for  the  amount 
represented  on  the  roll. 

Giving  Orders  for  Manufacturing  Work.  As  ordinarily  consid- 
ered, orders  are  of  two  general  classes,  namely: 


NO. 


PRODUCTION  ORDER 


DATE 


Please  execute  this  order,  charging  all  Labor  and  Material  to 
above  order  number. 


Complef^  the  work  by 


Completed 


Approved 


FACTORY  MAt1A6tR 


EHg.  18.    Production  Order. 

1.  Production  Orders,  by  which  the  production  departments  are  set 
to  work  manufacturing  some  regular  or  special  product  which  is  to  be  sold 
to  customers. 

2.  Plant  Orders.  These  orders  relate  to  the  repairs  and  maintenance 
of  the  grounds,  buildings,  and  equipment  of  the  plant,  and  to  new  additions  to 
and  alterations  of  the  same. 

Both  of  these  classes  originate  with  the  Factory  Manager,  who 
receives  instructions  as  to  all  important  orders  from  the  General 
Manager  of  the  company,  who  will  authorize  and  keep  in  touch,  not 
only  with  the  production  of  the  plant,  but  in  a  general  way  with  all 
changes,  improvements,  and  maintenance  expenses  of  the  establish- 
ment. 

114 


MACHINE  SHOP  MANAGEMENT  47 

Production  Orders.  Fig.  18  shows  the  form  of  a  regular  pro- 
duction order.  This  card  or  blank  is  made  of  such  dimensions  as  the 
kind  of  manufacturing  business  to  which  it  pertains  may  require.  It 
is  customary  to  use  a  card  4  by  6  inches;  but  if  such  is  to  be  written 
upon  the  central  space  in  order  to  describe  the  work  properly,  it 
should  be  somewhat  larger.  The  principal  features  of  this  form  are 
spaces  for  the  title  of  the  card,  the  order  number,  and  date.  At  the 
bottom  is  given  the  date  when  the  work  is  expected  to  be  completed, 
and  the  date  of  its  actual  completion.     These  dates  are  important  as 


FOR  ORDER 
NO. 


SUB-PRODUCTION  ORDER 

"PPT 


DATE 


P/ease  execute  the  work  described  below  and  ctiarge  all  labor  and 
material  to  the  above  order  number. 


When  completed  deliver  to Depj. 


Complete  the  work  by 


Comp  feted 


Pig.  19.    Sub-Production  Order. 

a  matter  of  reference  in  considering  the  promptness  and  eflSciency  of 
the  departments  where  the  work  has  been  done. 

The  work  to  be  done  is  briefly  described  in  the  central  portion, 
together  with  such  references  to  sets  of  drawings,  etc.,  as  may  be 
necessary  to  render  the  terms  of  the  order  indisputably  certain.  This 
order  is  signed  by  the  Factory  Manager  and  sent  to  the  Superintendent. 
In  a  large  concern  it  is  sent  to  the  Superintendent  of  Production  or  the 
Production  Engineei:,  according  to  the  particular  manner  of  the 
organization  of  the  official  force. 

In  any  event  the  order  is  turned  over  to  the  official  having  charge 
of  production,  who  will  make  out  Svb-Production  orders  (Fig.  19) 
for  each  department  in  which  the  particular  work  described  upon 
the  orders  is  to  be  done.    A  time  limit  is  given  for  the  completion  of 

115 


48  IMACHINE  SHOP  MANAGEIVIENT 

the  work,  and  a  space  provided  for  the  actual  date  of  completion. 
They  are  not  signed  when  issued,  but  are  dated  and  signed  by  the 
foreman  when  the  work  is  completed. 

Plant  Orders.  As  has  been  described,  plant  orders  are  those 
necessary  for  the  changes,  improvements,  and  maintenance  of  the 
plant  and  equipment.  In  some  establishments  there  are  two  series 
of  orders,  namely:  (a)  those  for  improvements  and  maintenance  of  the 
plant  proper — that  is,  grounds  and  buildings;  and  (b)  improvements 
and  maintenance  of  equipment.  This  is  a  very  proper  and  natural 
division.  These  accounts  may  be  subdivided  to  a  very  great  extent, 
but  not  with  corresponding  value. 

Plant  orders  are  usually  issued  by  the  Superintendent  (or  Gen- 
eral Superintendent,  in  a  large  plant),  and  are  returnable  to  him,  as 


NO. 


PLANT  ORDER 


DATE 


Please   execute  the  work  described  belotv  and  charge  all  labor  and 
material  on  the  back  of  this  card  and  return  it  to  me.. 


To  be  completed  by 


Completed 


Pig.  20.   Plant  Order.  * 

will  be  seen  upon  reference  to  the  form  shown  in  Fig.  20.  This  order 
is  usually  directed  to  a  certain  department.  If  more  than  one  depart- 
ment is  involved  in  the  work,  a  separate  order  is  issued  to  each.  The 
general  form  of  the  order  is  the  same  as  in  the  two  preceding  ones,  the 
instructions  being  changed  to  suit  the  nature  of  the  case. 

On  the  back  of  this  order  is  a  form  for  entering  the  cost  of  material 
and  labor,  as  shown  in  Fig.  21.  The  dates  upon  which  each  item 
(or  group  of  items)  of  material  is  furnished,  are  given,  as  are  also  the 
dates  for  the  various  items  of  labor,  although  the  work  of  an  entire 

116 


]VIACHINE  SHOP  MANAGEMENT 


49 


week  may  be  entered  upon  a  single  line.  On  the  second  half  of  the 
card,  space  is  provided  for  the  totals  of  both  material  and  labor  cost; 
also  such  general  expenses  in  the  form  of  a  percentage  or  such  other 
apportionment  as  may  be  authorized,  are  entered. 

By  this  method  the  order  for  the  work,  and  a  summary  of  the 
expense  of  executing  the  order,  are  contained  upon  the  same  card, 
which  is  very  convenient  for  future  reference  and  comparison. 

Storing  and  Issuing  Stock  and  Materials.  The  orders  having 
been  put  in  force  in  the  shop,  the  next  step  is  to  obtain  the  necessary 
material  or  stock  with  which  to  do  the  work. 

All  purchased  stock,  material,  and  stores  are  turned  over  to  the 


DATE 

MATERIAL 

VALUE 

DATE 

LABOR 

HR5 

VALUE 

TOTAL  LABOR 

TOTAL  MATERIAL 

EXPENSES 

TOTAL  MATERIAL 

TOTAL  COST 

Fig.  21.    Back  of  Plant  Orfler  Shown  In  Fig.  20.    For  entering  cost  of  material  and  labor. 

General  Storekeeper,  whose  duty  it  is  to  classify  them,  store  them 
properly,  and  issue  them  only  on  properly  authorized  requisitions.  A 
large  portion  of  his  stock  he  obtains  by  making  requisitions  upon  the 
Purchasing  Agent. 

To  account  properly  for  the  receipts  and  issues  of  this  stock  so  as 
always  to  have  on  hand  what  is  wanted,  and  at  tlie  same  time  to  avoid 
carrying  an  unneces.sarily  large  stock  of  any  of  the  articles  in  store, 
he  uses  a  Stock  Ledger  Card  of  the  form  shown  in  Fig.  22.  This 
gives  the  name  of  the  article  listed,  and  its  dimcnsion.s,  weight,  etc. 
At  the  right  of  this  are  entered  the  maximum  and  the  minimum 
quantities  to  be  kept  in  stock.     Whenever  the  stock  on  hand  is  re- 


117 


50 


IMACHINE  SHOP  INIANAGEMENT 


ST0C^ 

LED6E.B 

CARD  _ 

_ 

MAX 

ARTICLt 

MIN 

Received 

Issued 

Date 

Amouni- 

Date 

Amount 

Date 

Amount 

Date 

Amount 

Date 

Amount 

Total 

Forward 

T<if7|I 

Barwarc 

ffl^                                                    _       . 

Tfttxl 

Fig.  29,    Stock  Ledger  Card.    Same  form  is  printed  also  on  back  of  card. 


REQ.  NO. 

REquismoN 

n*TF 

STOREKEEPER:   P/eose  issue  for  use  on  Order  No. 

the  following 

Material. 

QUAN. 

DESCRIPTION 

DATE  ISSUED 

FQMMAN. 

OEPAfrrMENt. 

StOM.  RtCPER. 

Fig.  23.    Form  of  Requisition. 
Carbon  copies  of  the  entries  are  made  on  the  Invoice  form,  Fig.  34. 

duced  to  near  the  minimum  quantity,  the  Purchasing  Agent  is  re- 
quested to  order  enough  more  to  bring  the  quantity  up  to  the  maximum. 
In  making  requisitions  upon  the  Purchasing  Agent,  the  Store- 
keeper must  take  into  consideration  the  length  of  time  necessary  to 
obtain  the  article  wanted.  \Yire  nails,  wood  screws,  and  such  arti- 
cles can  usually  be  obtained  in  24  hours,  while  brass  tubing  may  take 

118 


IVIACHINE  SHOP  IVIANAGEMENT 


51 


three  weeks.  Iron  castings  can  be  had  in  two  days,  while  steel  cast- 
ings will  frequently  require  six  weeks. 

^Vhen  articles  are  received  in  stores,  the  date  and  quantity  will  be 
entered  under  the  heading  Received,  and  other  quantities  added  to 
these  as  received.  Articles  issued  will  be  charged  under  the  heading 
Issued,  giving  the  date  and  amount.  The  quantity  on  hand  may  be 
quickly  ascertained  by  adding  the  quantities  received  and  the  quan- 
tities issued,  and  subtracting  the  sum  of  the  issues  from  the  sum  of 
the  receipts. 

As  most  articles  are  purchased  in  considerable  quantities  and 
issued  in  small  lots,  there  will  be  few  entries  of  receipts  and  a  large 


REQ.  NO. 

INVOICE 

DATF. 

/  hava  issued  to  apply  on  Order  No.  _ 
Material. 

ftie  follotving 

QUAN. 

DESCRIPTION 

RATE 

VALUE 

DATE  ISSUED 

FOREMAN 

OEPARXMENT 

iTORt  KtEPtR 

Fig.  24.    Form  of  Invoice. 

Entries  are  made  by  means  of  carbon  paper,  duplicating  those  made  on  the 

Requisition  form,  Fig.  23. 

number  of  entries  of  issues;  therefore  the  greater  portion  of  the  card 
is  devoted  to  records  of  issues.  The  card  is  printed  with  the  same 
form  on  both  sides;  and  when  the  spaces  on  the  first  side  are  filled, 
the  account  is  balanced,  and  the  results  carried  to  the  opposite  side. 

These  cards  are  kept  in  filing  drawers,  where  they  are  located  in 
alphabetical  order  by  the  names  of  the  articles  they  represent. 

A  foreman,  on  receipt  of  a  regularly  numbered  and  authorized 
production  order  or  sub-production  order,  is  thereby  authorized  to 
make  requisition  for  such  stock  and  material  as  may  be  necessary  to 
use  in  the  execution  of  the  order.    This  he  will  do  by  the  use  of  the 


119 


52 


MACHINE  SHOP  IVIANAGEIVIENT 


Requisition  shown  in  Fig.  23,  entering  the  order  number  and  date,  and 
specifying  the  quantities  and  descriptions  of  the  articles  required. 
Ordinarily  each  requisition  will  contain  but  one  article  or  class  of 
articles.  At  the  bottom  of  the  requisition,  the  foreman  will  enter  the 
name  of  his  department  and  his  own  signature. 

These  requisition  blanks  are  made  up  in  pads  (the  form  shown 
in  Fig.  23),  of  white  paper  alternating  with  tinted  paper  on  which  is 
the  Invoice  form  shown  in  Fig.  24.  This  latter  form  has  its  ruling 
and  other  principal  features  identical  with  the  form  of  the  requisition, 
so  that  by  the  use  of  carbon  paper  the  foreman  makes  a  duplicate  on 
the  Invoice  blank,  of  the  order  number  and  date,  the  articles  required, 
the  name  of  his  department,  and  his  own  signature. 


To  CREDIT  OF 
ORDER  NO.  ^ 


MATERIAL  RETURNED 


DATE. 


STORE  KEEPER   The  following  Material  is  returned  as  not  necessary  for 
U5e  on  the.  above  order. 


QUAN. 


DESCRIPTION 


RATE       VALUE 


RECEIVED  THE  ABOVE 


ATOHt  xetPER: 


.  FOREMAN. 
—  OEPT. 


Fig.  25,    Returned  Material  Card. 


When  the  Storekeeper  issues  the  articles,  he  first  enters  upon  the 
requisition  blank  the  date  issued,  and  then  passes  it  to  his  assistant, 
who  notes  the  issue  on  the  Stock  Ledger  Card,  and  then  places  it  on 
file.  The  Storekeeper  will  enter  on  the  invoice  the  rate  and  value  of 
the  articles  issued,  and  the  date  of  issue,  and  will  sign  it  under  the 
foreman's  signature.  He  will  send  it,  with  the  articles  issued,  to 
the  foreman,  who  will  in  turn  make  it  a  part  of  his  report  of  material 
used. 

When  the  work  on  an  order  is  completed,  such  serviceable  stock 
and  material  as  may  remain  will  be  returned  to  the  Storekeeper, 


120 


MACHINE  SHOP  MANAGEMENT  53 

together  with  a  Returned  Material  Card  of  the  form  shown  in  Fig.  25. 
The  Storekeeper  will  enter  upon  it  the  value  of  the  material  returned, 
credit  it  to  the  department  from  which  it  came,  and  sign  the  receipt 
in  the  lower  left-hand  corner.  The  card  will  then  be  returned  to  the 
foreman  as  his  authority  for  deducting  the  amount  from  the  material 
account  in  the  order  in  question. 

FoUow-Up  Methods  for  Tracing  Orders  in  the  Shop.  The  Sub- 
Production  orders  having  been  put  into  the  departments,  the  first 
one  will  order  the  material  for  starting  the  work.  For  instance,  the 
first  step  may  be  upon  iron  castings.  Theoretically  all  stock  and 
material  come  from  the  Store-Room.  Therefore  we  might  say  that 
upon  a  strict  construction  of  this  general  rule  the  castings  should  be 
furnished  by  the  Foundry  and  sent  to  the  Store-Room,  from  which 
they  might  be  drawn  upon  requisitions  the  same  as  any  other  material. 
Practically  this  would  be  not  only  a  troublesome  but  an  expensive 
method,  requiring  a  great  deal  of  unnecessary  handling  and  transpor- 
tation. The  problem  is  much  more  practically  solved  by  considering 
the  Foundry  as  one  of  the  manufacturing  departments  receiving  its 
raw  material  (namely,  pig  iron)  through  store-room  accounts,  and  thus 
"constructively"  from  the  store-room,  while  physically  it  is  in  the 
foundry  yard.  This  answers  the  demands  of  a  theoretical  as  well  as 
a  practical  view  of  the  case. 

Therefore  the  first  sub-production  order  will  go  to  the  iron  foun- 
dry, which  will  make  the  castings  and  deliver  them  to  such  depart- 
ments as  are  required  to  do  the  first  work  upon  them,  as  directed  upon 
the  order.  The  sub-production  order  which  this  department  has 
received,  directs  to  what  department  they  shall  be  sent  when  com- 
pleted; and  so  on,  until  they  have  gone  through  the  last  department 
and  are  sent  to  the  Finished  Parts  Store-Room. 

This  arrangement  is  all  right  as  far  as  it  goes.  If  every  man 
attended  strictly  to  his  business  and  pushed  work  along  as  rapidly  as 
possible,  and  every  foreman  sent  his  work  along  to  the  next  department 
as  soon  as  his  department  had  completed  its  work,  this  plan  might 
work  fairly  well.  Unfortunately,  however,  these  conditions  seldom  or 
never  exist;  and  there  must  be  ways  and  means  devised  to  keep  the 
work  moving  and  to  be  able  to  trace  and  locate  the  work  upon  any 
order  at  any  time  when  information  is  desired  upon  it  or  its  state  of 
progress. 

121 


54 


IVIACHINE  SHOP  MANAGEMENT 


To  accomplish  this,  there  is  a  Transfer  Office,  located  as  con- 
veniently as  may  be  for  all  departments,  and  serving  as  a  sort  of 
"clearing  house"  for  all  departments  in  transacting  inter-depart- 
mental business  so  far  as  it  relates  to  the  transfer  of  the  work  in  prog- 
ress. By  this  method,  departments  send  all  their  work  by  way  of 
the  Transfer  Office,  where  proper  records  are  kept  of  all  such  transfers, 
so  that  at  any  moment  the  Transfer  Clerk  can  locate  any  piece  of  work 
in  progress  in  the  plant. 

nbhe  operation  of  this  method  is  as  follows:  The  sub-production 
orders  are  sent  to  the  Transfer  Clerk,  who  fills  out  two  Transfer  Cards, 

as  shown  in  Fig.  26,  one  of 
which  he  sends  with  the  order 
to  the  first  department  that  is 
to  do  work  on  the  order,  and 
the  other  he  retains.  This 
card  provides  spaces  for  the 
various  departments,  which 
are  designated  by  numbers. 
Following  these  are  spaces  for 
entering  the  dates  of  transfers, 
the  entries  being  made  with  a 
rubber  stamp.  After  these 
spaces  are  columns  for  the 
number  of  pieces  of  work  re- 
ceived and  the  number  of  pieces 
delivered. 

When  the  first  department 
has  finished  its  work,  the  num- 
ber of  pieces  is  entered  in  the 
column  headed  Pieces  Deliv- 
ered, and  the  work  and  the  card 
sent  to  the  Transfer  Office. 
The  duplicate  transfer  card 
that  was  retained  by  the  Transfer  Clerk  was  filed  in  a  compartment 
in  a  Transfer  Case  corresponding  to  the  department  where  the  work 
began.  He  stamps  the  date  of  transfer  on  both  cards,  entering  the 
number  of  pieces  on  his  own,  and  sends  the  work  on  its  way  to  the  next 
department,  together  with  the  transfer  card.  His  own  card  he  re- 


ORDEi*  NO.                   TRANSFER  CAPD 

OtPT 
MO. 

DATE    OF  TRANSFER 

PIECES 
RECEIVED 

PIECES 
DELIVERED 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

II 

12 

13 

14 

1N5P 

PA55E.D  AS  CORRtCT 

Fig.  25.    Transfer  Card. 


122 


MACHINE  SHOP  MANAGEMENT 


55 


moves  from  the  compartment  representing  the  first  department,  and 
places  it  in  a  compartment  representing  the  department  to  which  he 
has  now  sent  the  work. 

Subsequent  transfers  are  made  in  the  same  manner,  small  lots 
of  work  actually  being  sent  to  the  Transfer  OflSce,  but  large  lots  or 
heavy  and  bulky  work  being  sent  directly  from  one  department  to  the 
next,  but  under  the  personal  direction  of  the  Transfer  Clerk  or  his 
assistant. 

When  the  parts  are  completed  and  ready  for  inspection,  the 
Inspector  is  notified;  and  upon  inspecting  the  parts  previous  to  their 
being  sent  to  the  Finished  Parts  Store-Room,  he  enters  the  results  of 
his  work  in  the  space  at  the  bottom  of  the  card  that  has  accompanied 
the  work  in  its  progress  through  the  departments. 

The  Transfer  Clerk's  card  traij  is  shown  in  Fig.  27,  and  is  made 
with  compartments  of  sufficient  dimensions  to  hold  the  number  of 
cards  expected  to 
be  on  file  in  anyone 
department  at  the 
same  time.  The 
cards  are  filed  in 
numerical  order.  In 
a  large  concern  the 
usual  card-index 
method  of  guide 
cards  is  used,  so  as 
to  render  the  work 
of  finding  the  right  card  when  wanted,  easy  and  expeditious. 

Tool-Room  Methods.  A  large  number  of  small  tools  such  as 
drills,  taps,  reamers,  and  the  like,  and  also  numerous  jigs  and  fixtures 
of  various  kinds,  are  drawn  daily  from  the  Tool  Room  and  returned 
there  after  being  used.  The  problem  of  keeping  track  of  these  valu- 
able tools,  of  knowing  where  to  locate  every  tool  that  has  been  issued, 
and  getting  them  back  promptly  after  they  have  been  used,  is  an 
important  one. 

The  simplest  method  of  doing  this  is  by  the  use  of  small  brass 
, checks  bearing  the  individual  numbers  of  the  men.  For  this  purpose 
a  Tool  Check  Board,  as  shown  in  Fig.  28,  is  provided.  This  is  lined 
off  in  small  square  or  oblong  spaces,  the  number  of  spaces  equaling 


Fig.  27.    Transfer  Clerk's  Card  Tray. 


123 


56 


MACHINE  SHOP  MANAGEMENT 


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II 

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21 

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51 

51 

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71 

71 

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22 

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72 

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Fig.  28.    Tool  Check  Board. 
124 


MACHINE  SHOP  MANAGEMENT  57 

or  somewhat  exceeding  the  number  of  men  employed  in  the  depart- 
ments served  by  the  Tool  Room.  At  the  top  of  each  of  these  spaces 
is  the  name  of  one  of  the  men;  and  beneath  the  name  two  pins  project 
about  an  inch  from  the  face  of  the  board.  Under  each  pin  is  the 
man's  individual  number.  Two  forms  of  brass  checks  are  used,  a 
circular  disc  of  |  inch  diameter,  and  a  rectangular  one  ^  inch  by  1^ 
inches.  Each  check  has  a  hole  by  which  it  may  be  hung  on  the  pins, 
and  each  bears  the  individual  number  of  the  man,  the  checks  being 
used  in  pairs  of  one  circular  and  one  rectangular  check. 

All  tools  are  kept  upon  shelves,  divided  for  individual  tools  or,  in 
some  similar  manner;  and  in  front  of  each  tool  is  a  pin  similar  to  those 
on  the  board,  upon  which  checks  may  be  hung. 

The  operation  of  this  method  is  as  follows:  the  circular  checks 
(there  are  usually  twelve  of  them)  are  issued  to  the  men  of  correspond- 
ing numbers.  The  rectangular  checks  are  held  upon  the  left-hand 
pins  under  the  men's  names.  When  a  man  goes  to  the  Tool  Room  for 
a  tool,  or  sends  a  boy  for  one,  he  presents  one  of  his  circular  checks. 
This  the  Tool  Keeper  hangs  on  the  right-hand  pin  under  the  man's 
name.  He  also  removes  one  of  the  twelve  rectangular  checks,  and 
hangs  it  on  the  pin  in  front  of  the  space  from  which  the  tool  was 
taken.  If  the  workman  sends  for  another  tool,  another  circular  check 
is  added  to  the  first  one,  and  another  rectangular  check  removed  from 
the  board. 

It  will  be  seen  that  there  must  always  be  twelve  checks  on  the 
board  under  each  name,  counting  both  rectangular  and  circular  ones. 
The  absence  of  a  tool  from  a  shelf  is  accounted  for  by  the  rectangular 
check  hung  on  the  pin  in  place  of  it,  and  the  number  of  this  check 
shows  what  man  has  the  tool.  The  number  of  circular  checks  on  the 
board  shows  how  many  tools  each  man  has  in  his  possession. 

The  result  of  this  method  is  that  tools  can  be  issued  and  taken 
back  very  rapidly;  and  accurate  and  positive  records  are  very  quickly 
made,  without  the  use  of  a  book,  card,  slip,  or  writing  of  any  kind. 

At  the  end  of  the  week,  all  tools  are  turned  in  to  the  Tool  Room, 
thus  enabling  the  Tool  Keeper  to  check  them  up  and  rectify  any 
possible  errors  that  may  have  been  made  during  the  yireceding  week. 
On  Monday  morning,  such  tools  as  are  needed  are  re-issued. 


125 


ADVERTISING  AND  SALES 
ORGANIZATION 

INTRODUCTION 

The  purpose  of  this  article  is  not  to  teach  either  the  art  of  adver- 
tising nor  the  science  of  salesmanship  but  rather  only  to  exhibit  and 
to  explain  the  technique  of  recognized  methods  found  successful  in 
well  established  advertising  and  sales  departments;  in  particular,  to 
discuss  the  machinery  of  the  department — its  record-keeping  systems. 

Opinions  differ  as  to  the  proper  place  in  a  business  organization 
of  advertising  and  sales — whether  they  should  be  handled  by,  and 
considered  as,  two  separate  and  distinct  departmental  organizations, 
or  one.     Both  plans  have  their  champions. 

Whether  we  call  it  an  advertising  or  a  sales  department,  the  results 
sought — the  reasons  for  the  existence  of  the  department — are  the 
same.  To  sell  goods  is  the  aim  of  the  organization,  be  its  head  an 
advertising  manager  or  a  sales  manager 

Advertising  has  been  defined  to  be  printed  salesmanship;  yet 
there  is  a  well-defined  dividing  line  between  the  work  of  the  adver- 
tising man  and  the  salesman.  The  advertising  man  seeks  to  impress 
the  name  of  the  house  and  the  name  and  quality  of  its  product,  on 
the  public  mind;  to  create  interest;  to  arouse  curiosity;  to  stimulate 
desire;  to  attract  people  to  the  store — in  a  mercantile  business.  The 
salesman  seeks  to  turn  that  interest,  curiosity,  desire,  into  action — 
the  action  of  purchase. 

The  advertising  man  introduces  the  possible  customer;  the 
salesman  makes  the  sale.  But  in  some  businesses,  the  advertising 
man  goes  one  step  farther  and  actually  makes  the  sale — as  in  adver- 
tising intended  to  secure  direct  orders,  by  mail.  Also,  the  salesman, 
when  the  customer  has  been  introduced,  makes  use  of  other  forms 
of  advertising,  to  further  stimulate  desire  and  assist  in  making  the  sale. 

No  matter  at  what  angle  the  subject  is  viewed,  it  is  seen  that  the 
advertising  man  and  the  salesman  are  very  dependent  on  each  other. 
We  prefer,  therefore,  to  consider  the  sales  and  advertising  departments 


127 


2  ADVERTISING  AND  SALES 

as  of  equal  importance;  both  subordinate  parts  of  the  sales  diAision 
but  working  in  perfect  harmony. 

The  salesman  knows  his  goods,  their  strong  and  weak  points, 
the  classes  of  people  to  whom  they  will  appeal.  He  should  know, 
also,  all  about  his  competitor's  goods,  and  in  what  respects  they  are 
excelled  by  his  own.  In  short,  he  is  the  one  who  can  give  the  best 
selling  points  to  the  advertising  man. 

Successful  advertising  is  not  confined  to  the  use  of  printers'  ink. 
The  most  successful  advertising  is  that  which  increases  business  at 
least  cost.  Hence,  for  a  business  which  purposes  a  permanent  estab- 
lishment, gaining  the  confidence  and  good  will  of  customers  and  pos- 
sible customers  is  of  the  first  importance.  A  justly  satisfied 
customer  is  just  as  truly  an  advertisement  as  anything  in  print. 

When  a  selling  campaign  is  contemplated,  the  plans  should  be 
worked  out  by  the  salesman  and  the  advertising  man.  The  two 
must  work  together  and  neither  should  undertake  a  new  campaign, 
without  first  consulting  the  other. 

The  claim  is  sometimes  made  that  the  function  of  advertising 
is  fulfilled  w^hen  the  inquiry  has  been  received;  that  it  is  then  a  ques- 
tion of  salesmanship — but  where  does  advertising  end  and  salesman- 
ship begin?  If  sales  are  made  by  mail,  the  salesman  supplements 
his  salesmanship  with  catalogs,  booklets,  circulars,  letters — all  as 
surely  advertising  as  salesmanship ;  in  the  store,  he  displays  his  goods 
attractively,  which  is  a  most  effective  form  of  advertising.  And  so, 
in  the  battle  for  business,  victories  are  won  by  supplementing  adver- 
tising with  salesmanship,  and  salesmanship  with  advertising — com- 
bining the  two  for  results. 

Occasionally,  a  man  is  found  who  combines  the  creative  ability 
of  the  advertising  man  with  the  executive  ability  of  the  sales  manager. 
WTien  such  a  man  is  found,  it  is  safe  to  place  him  in  charge  of  the 
sales  division,  giving  him  full  control  of  both  advertising  and  sales. 
He  probably  will  require  the  services  of  a  man  to  attend  to  the  details 
of  the  advertising  department,  but  such  an  arrangement  makes  the 
sales  manager  alone  responsible. 

Most  large  enterprises,  however,  require  the  services  of  one  man 
to  handle  the  advertising.  For  this  reason  the  head  of  this  depart- 
ment is  referred  to  as  the  advertising  manager,  and  the  department 
as  an  advertising  department. 

128 


ADVERTISING  AND  SALES  3 

SYSTEMS  AND  RECORDS 

In  addition  to  the  technical  knowledge  of  the  printing  art — 
type,  engraving,  and  paper — and  of  advertising  media,  which  the 
successful  advertising  manager  requires,  he  should  have  the  faculty 
of  applying  common-sense  system  in  the  handling  of  his  work  An 
elaborate  system,  which  oversteps  legitimate  bounds  and  enters  the 
realm  of  red  tape,  is  to  be  deplored,  but  the  advertising  man  must 
have  a  system  of  records  which  will  show  at  all  times  what  he  is  doing, 
what  results  he  is  getting,  exactly  where  he  stands. 

Any  discussion  of  systems  must  be  more  or  less  theoretical, 
even  when  written  by  an  experienced  advertising  man.  The  system 
that  works  perfectly  in  one  office  may  fit  in  no  other,  therefore  the 
systems  described  in  this  book  are  to  be  taken  as  examples  of  what 
other  advertising  men  have  adopted.  From  them  the  student  will 
be  able  to  devise  a  practical  system  for  a  particular  enterprise.  At 
the  start,  the  system  probably  will  be  too  complicated;  experience 
alone  will  tell  the  advertising  manager  where  to  eliminate,  where  to 
simplify,  where  to  add  to  make  it  fit. 

Advertising  Information.  The  advertising  manager  collects 
a  vast  amount  of  information  for  future  use.  Every  time  he  picks 
up  a  newspaper  or  magazine  his  eye  scans  the  pages  for  ideas,  while 
mingling  with  the  crowds  or  walking  alone,  he  notes  what  would  be 
to  the  unobserving  but  trifling  incidents,  all  of  which  can  be  worked 
into  copy.  If  he  is  systematic  he  clips  and  makes  memoranda  of 
all  this  information,  preserving  it  for  use  when  needed. 

How  to  preserve  it  in  such  shape  that  it  can  be  located  quickly 
is  something  of  a  problem.  Probably  the  oldest  methods  of  pre- 
serving clippings  and  memoranda  is  to  use  a  scrapbook,  and  paste 
in  all  clippings.  The  scrapbook,  however,  is  never  satisfactory  for 
this  purpose;  it  is  not  a  flexible  system. 

Clippings  should  be  so  filed  that  any  single  clipping  can  be 
removed  without  disturbing  the  others.  The  vertical  file  is  largely 
used  as  a  receptacle  for  clippings,  but  is  not  entirely  satisfactory  unless 
envelopes  take  the  place  of  folders.  With  folders,  clippings  are  liable 
to  be  lost  through  the  open  ends. 

An  old  and  satisfactory  method  is  to  file  clippings  in  envelopes. 
Unless  the  clippings  are  of  large  size — like  entire  pages  from  trade 


129 


4  ADVERTISING  AND  SALES 

papers — it  is  not  necessary  to  use  envelopes  of  a  size  to  fit  a  vertical 
file,  A  size  that  will  fit  one  of  the  smaller  files — about  7"  X  9" — will 
be  found  more  satisfactory. 

The  most  satisfactory  method  of  indexing  is  by  subject.  An 
envelope  is  used  for  each  subject  about  which  clippings  are  to  be  made, 
all  clippings  and  memoranda  being  filed  in  the  proper  subject  en- 
velope.    The   envelopes   are  indexed  alphabetically,   according   to 


SUBJECT. 


SPEOAL  CLIPRNGS. 


Fig.  1.     Special  Box  Envelope  for  Clippings  and  Advertising  Copy 

subjects,  and  a  list  of  contents  should  be  recorded  on  the  outside  of 
each  envelope.  A  form  of  record  is  shown  in  Fig.  1,  while  Fig.  2 
shows  the  manner  of  filing  and  indexing. 

Clippings  are  made  use  of  by  the  advertising  man  chiefly  in  the 
preparation  of  copy,  and  are  much  more  convenient  to  handle  if  filed 
in  envelopes  than  when  pasted  in  scrapbooks.  Instead  of  an  unwieldy 
book  to  handle,  an  envelope  is  taken  from  the  file  and  the  desired 
clipping  selected. 

Sometimes  the  work  of  the  advertising  man  is  of  a  nature  which 
requires  the  preservation  of  catalogs,  booklets,  and  all  sorts  of  printed 

130 


ADVERTISING  AND  SALES  5 

matter  issued  by  competitors.  When  the  accumulation  of  such  matter 
is  sufficient,  it  is  best  to  install  a  complete  catalog  filing  system,  such 
as  is  used  in  the  purchasing  department. 

Designs  and  Cuts.  A  class  of  valuable  property  which  accumu- 
lates rapidly  in  an  advertising  department,  consists  of  advertising 
designs  and  cuts.  This  property  is  not  given  the  care  deserved  when 
its  value  is  considered. 


Fig.  2.     File  Drawer  Showing  How  Clippings  are  Filed  by  Subject 

Artists  are  paid  for  designs  but  too  often  after  the  engravings  are 
made,  they  are  stored  in  drawers,  on  shelves,  or  in  any  convenient 
place  to  get  them  out  of  the  way.  Little  attempt  is  made  to  so  file 
and  index  them  that  each  can  be  quickly  located. 

An  old  design  may  be  available  for  use  at  any  ti-me — an  engraving 
of  different  size  than  the  original,  may  be  needed,  or  a  slight  altera- 
tion may  produce  a  complete  change  in  the  design  at  much  less  cost 
than  making  a  new  one.  Engravings  are  expensive  and  accumulate 
with  amassing  rapidity.     Suppose  a  retailer  docs  daily  advertising 


131 


6  ADVERTISING  AND  SALES 

and  uses  a  new  cut  each  day;  at  the  end  of  one  year  he  owns 
three  hundred  and  sixty-five  original  engravings,  and  probably  an 
equal  number  of  electrotypes.  Any  of  these  may  be  available  for 
use  another  time,  either  in  newspapers,  catalogs,  or  circulars. 

The  national  advertiser,  using  magazines  and  trade  papers, 
may  accumulate  a  less  number  of  engravings  than  the  retailer,  but 
owing  to  the  class  of  engraving  required  and  the  number  of  duplicates 
needed,  his  investment  is  even  greater. 

The  natural  supposition  would  be  that  advertisers  would  give 
this  property  proper  care,  filing  under  correct  classifications,  indexed 
for  ready  reference.     But  experience  proves  the  contrary.     Every 

printing  and 
publishing  oflice 
that  has  been 
running  five 
years  has  an 
accumulation  of 
cuts  belonging  to 
advertis  e  r  s, 
which  represent 
an  investment  of 
thousands  of  dol- 
lars. 

Occasionally 
an  advertiser  is 
found  who  knows  exactly  where  each  cut  has  been  sent  and  calls 
for  it  when  needed,  but  a  big  majority  of  these  cuts  are  never  called 
for  and  finally  are  sold  by  the  printer  for  what  they  will  bring,  as 
old  metal. 

Now  the  property  used  by  the  advertising  department  should 
receive  the  same  care  as  any  other;  a  dollar  invested  in  designs  and 
engravings  should  be  regarded  as  a  dollar's  worth.  And  if  common 
sense  be  applied  in  devising  a  system,  they  can  be  cared  for  with  as 
little  trouble  as  any  other  property  carried  in  stock. 

A  very  satisfactory  method  of  filing  designs  is  to  use  a  file  con- 
structed on  the  principle  of  the  vertical  file.  Stock  sizes  of  files  are 
too  small.  Designs  cannot  be  folded  and  the  file  should  be  large 
enough  to  take  in  the  largest  designs  used.     An  elaborate  file  is  not 


Fig.  3.     Box  File  for  Drawings  and  Photographs 


132 


ADVERTISING  AND  SALES  7 

necessary;  a  box  constructed  along  the  lines  of  the  one  shown  in  Fig. 
3,  will  answer  the  purpose.  The  chief  requirements  are  to  have  the 
designs  filed  in  one  place,  where  they  can  be  found,  and  to  keep  them 
clean.  Any  carpenter  can  build  such  a  file,  while  any  cabinet  man 
will  construct  one  of  more  elaborate  design  to  match  the  furniture 
of  the  office. 

Designs  may  be  filed  alphabetically  by  subjects,  or  numbered 
and  filed  numerically.  As  a  rule,  the  alphabetical  method  will  be 
found  more  satisfactory. 

Engravings  are  best  filed  in  a  cut  cabinet  of  the  usual  style 
This  is  a  cabinet  of  shallow  drawers,  just  deep  enough  to  hold  type- 


ho 


ELBCrSOS  ORDEREd- 


NUMBER_ 
SUBJECT. 


Fig.  4.     Loose-leaf  Scrap  Book  Sheet  for  Preserving  Proofs  of  Engravings 

high  cuts.  All  engravings  should  be  numbered  and  electrotypes 
stamped  with  the  same  numbers  as  the  originals.  The  cuts  can  then 
be  filed  by  numbers,  and  each  drawer  labeled  to  show  the  numbers 
of  the  cuts  it  contains. 

Cuts  should  be  numbered  consecutively,  and  when  an  engraving 
is  made  in  a  new  size  it  will  take  the  next  number,  regardless  of  the 
fact  that  an  engraving  of  the  same  design  has  already  been  made. 
For  instance,  if  five  sizes  of  engravings  are  made  from  one  design, 
there  will  be  five  cut  numbers.  When  the  cut  is  numbered,  it  is  a 
good  plan  to  stamp  the  number  on  the  back  of  the  design;  then 


133 


8 


ADVERTISING  AND  SALES 


reference  to  the  design  will  show  how  many  times  it  has  been  en- 
graved and  the  numbers  of  the  cuts. 

Proofs  of  all  engravings  should  be  kept.  These  may  be  pasted 
in  scrapbooks,  but  the  books  should  be  loose  leaf.  This  makes  it 
possible  to  eliminate  all  dead  matter;  when  designs  are  of  no  further 
use,  the  sheets  containing  the  proofs  can  be  destroyed. 

A  sheet  may  contain  proofs  of  one  or  of  several  cuts,  depending 
on  the  size,  but  all  proofs  should  be  arranged  in  numerical  sequence. 
The  sheet  should  also  show  the  cut  number,  the  subject,  and  the 


SUBJECT 

CLASS 

size: 

MADE   BY 

DATE 

ENGRAVED 

HT.  or  ZINC 

SIZE 

DATE 

NUMBERS 

ELECTROS 

Fig.  5.     Index  Card  for  a  Record  of  Designs  and  Engravings 

date  of  ordering  electrotypes,  as  shown  in  Fig.  4.  Since  the  space 
required  for  proofs  cannot  be  told  in  advance,  it  is  more  practical 
to  substitute  a  rubber  stamp  impression  for  printing.  By  using  a 
small  stamp,  this  information  can  be  stamped  opposite  each  proof. 

Cut  Indexes  and  Tracers.  To  complete  the  filing  system  for 
cuts  and  designs,  an  index  is  needed.  Fig.  5  shows  a  convenient 
form  of  index  and  record  card.  This  card  is  headed  with  the  name 
or  subject  of  the  design,  and  is  indexed  under  this  subject.  The 
data  relative  to  the  design  includes  the  class — as  photograph,  wash 
drawing,  or  line  drawing — the  name  of  the  artist,  the  size  of  the 
design,  and  the  date  made.     Below  this  is  a  complete  record  of  all 


134 


ADVERTISING  AND  SALES  9 

original  engravings  and  electrotypes  made  from  the  design,  including 
their  numbers. 

On  the  back  of  the  card  is  a  record  of  the  publications,  catalogs, 
or  circulars  in  which  the  design  is  used,  with  dates,  as  shown  in  Fig.  6. 

If  the  name  of  the  artist  who  made  a  certain  design,  or  the  names 
of  publications  in  which  it  has  been  used,  is  wanted,  reference  to  this 
card  gives  the  desired  information.  This  one  card  provides  all 
information  that  is  likely  to  be  needed  in  reference  to  both  designs 
and  engravings. 


USED  IN 

DATE 

1 

' 

, 

Fig.  6.     Reverse  of  Index  Card  Showing  Where  Engravings  are  Used 

The  methods  described  provide  for  a  complete  record  of  designs 
and  engravings,  except  in  respect  to  cuts  which  have  been  sent  out. 
A  record  of  the  cuts  that  are  out,  and  where  each  has  been  sent,  is 
of  the  utmost  importance. 

When  a  cut  is  sent  out — to  the  printer,  the  publisher,  or  a  cus- 
tomer— a  receipt  should  be  obtained.  This  may  be  on  a  post  card 
printed  as  shown  in  Fig.  7.  At  the  same  time  a  record  to  be  used 
as  a  tracer  should  be  made.  This  should  be  on  a  form  similar 
to  the  one  shown  in  Fig.  8.  These  forms  may  be  filed  in  a  tickler 
under  the  date  on  which  the  cut  should  be  returned,  or  alphabetically; 
but  in  either  case  a  desk  file  should  be  used  so  that  they  can  be  re- 


135 


10 


ADVERTISING  AND  SALES 


ferred  to  very  readily.     This  file  should  be  looked  through  frequently 
for  it  is  very  necessary  to  follow-up  the  cuts  closely.     If  the  cut  h 


IQO 


Gerjtlemenj 

We  heretjy  «aciKnowledge  receipt  or  tTie 

foUOWlTTg  cuts: 


Ycfurs  Ttxily 


DRAWING  OR  CUT   SENT  OUT 


SUBJECT. 
PMOTO  


DRAWING . 


HALF  TONE 


ZINC 


ELECTRO 


SENT   TO 


PURPOSE . 


DATE  SENT_. 


SHOULD  BE  RETURNED   BY_ 


RETURN    REQUESTED. 


Fig.  7.     Postal  Card  Receipt  for  Cuts 

not  expected  to  be  re- 
turned, it  is  of  course 
unnecessary  to  make  this 
tracer  record. 

Copy  Proofs.  A  com- 
plete file  of  proofs  of  all 
copy  is  a  necessity  in 
every  advertising  depart- 
ment. If  requested  to 
do  so,  any  publisher  will 
furnish  several  proofs  of 
the  ad,  and  at  least  three 
proofs  should  be  kept  on 
file.  Every  piece  of  copy 
and  every  circular  or 
other  printed  matter 
should  bear  an  identify- 
ing mark  of  some  kind. 
This  usually  is  a  number. 

These  numbers  should 


Fig.  8.    Tracer  Card  for  Drawings  and  Cuts 


136 


ADVERTISING  AND  SALES  11 

be  registered  consecutively  either  in  a  book  or  on  cards,  and 
opposite  each  number  should  be  the  title  of  the  copy,  booklet,  or 
catalog.  It  is  well  to  run  different  series  of  numbers  for  advertising 
copy  and  other  literature.  Numbers  1  to  5,000  might  be  used  for 
copy,  and  5,001  to  10,000  for  printed  matter.  The  same  scheme  can 
be  used  to  good  advantage  for  office  blanks  of  all  kinds,  giving  each 
a  form  number  but  using  a  third  series  of  numbers. 

Proofs  of  ads  and  copies  of  all  printed  matter  and  blanks  should 
be  filed  alphabetically  by  subject  or  title.  For  proofs,  the  envelope 
scheme,  as  described  for  clippings,  can  be  used.  Envelopes  of  this 
size — 7"X9" — will  also  accommodate  copies  of  most  circulars, 
blanks,  and  booklets,  but  if  the  sizes  average  larger  a  vertical  file 
drawer,  with  large  envelopes,  can  be  used.  The  vertical  file  will 
also  accommodate  catalogs.  These  files  being  permanent,  the  ex- 
pense of  elaborate  cabinets  can  be  dispensed  with  by  substituting 
the  cheaper  transfer  files  supplied  by  all  manufacturers  of  such 
equipment. 

Each  time  a  piece  of  advertising  copy  is  re-set  in  a  different  size, 
it  should  be  given  a  new  number.  New  numbers  should  also  be 
given  each  circular,  booklet,  or  blank  when  it  is  re-printed,  provided 
there  is  the  slightest  change  in  the  copy. 

On  each  envelope,  the  copy  number  should  be  entered,  and  if 
the  copy  takes  several  numbers,  all  should  be  entered.  Copy  bear- 
ing the  tide  "Your  Chance"  may  be  set  in  three  sizes — full  page, 
No.  640;  half  page,  No.  641;  and  quarter  page.  No.  645;  all  proofs 
will  be  filed  in  one  envelope  and  the  three  numbers  will  be  entered 
on  the  outside. 

The  register  of  numbers  and  the  file  of  proofs  provide  for  the 
identification  of  any  copy;  if  the  title  of  any  piece  of  copy  is  wanted, 
the  number  being  known,  reference  to  the  register  gives  it;  or  if  the 
title  is  known,  reference  to  the  file  gives  the  number. 

PRINTING   ORDERS   AND  TRACERS 

Great  care  is  necessary  in  issuing  and  following  up  orders  for 
printing;  every  detail  must  be  watched  closely  if  satisfactory  results 
are  to  be  secured.  In  the  majority  of  offices  the  advertising  manager, 
or  a  man  under  him,  attends  to  all  details  of  ordering  printing.     Large 

137 


12  ADVERTISING  AND  SALES 

concerns  find  that  it  pays  to  employ  an  experienced  man  for  this 
work  alone.  To  a  concern  whose  printing  bills  amount  to  several 
hundred  dollars  a  month,  a  man  w^ho  will  give  close  attention  to  every 
detail  of  the  work,  from  seeing  that  he  gets  the  stock  specified  to 
checking  bills  for  overcharges,  can  make  his  services  worth  a  good 
salary. 

In  printing,  as  in  everything  else,  the  personality  of  the  house 
should  stand  out — a  typographical  style  should  be  established.  This 
is  accomplished  much  more  quickly  if  every  detail  of  the  printing  is 
in  the  hands  of  one  man. 

There  are  concerns  in  which  publicity  and  sales  work  must  be 
subdivided  to  such  an  extent  that  the  sales  manager  has  all  printed 
matter  prepared  under  his  direct  supervision;  while  the  advertising 
manager  is  responsible  for  the  preparation  and  placing  of  the  copy. 
In  one  such  concern,  which  has  come  under  the  writer's  observation, 
copy  for  printing  is  turned  over  to  a  man  entirely  outside  of  the  sales 
division.  The  theory  is  that  the  outside  man  will  watch  the  interest 
of  the  house,  in  the  matter  of  price,  more  closely  than  the  man  who 
prepares,  and  perhaps  is  to  use,  the  copy. 

This  theory  may  have  some  foundation  in  certain  quarters; 
probably  there  are  some  otherwise  competent  advertising  men  who 
are  occasionally  outwitted  by  the  printer;  but  it  is  also  true  that  the 
buyer  of  printing,  who  places  his  orders  on  the  basis  of  price  alone, 
frequently  loses  more  in  quality  than  he  saves  in  cost.  The  man 
who  is  to  use  a  booklet  or  folder  is  really  the  best  judge  of  its  worth — 
what  he  can  afford  to  pay  for  the  kind  of  work  he  wants;  he  knows 
best  its  possible  value  as  a  revenue  producer.  He  should  be  com- 
petent to  supervise  the  placing  of  the  orders,  but  without  exception 
all  printing  orders  should  be  placed  by  the  same  man. 

No  matter  by  whom  placed,  the  printing  order  should  specify 
every  detail ;  or  if  it  is  not  on  the  order  blank,  there  should  be  a  specifi- 
cation sheet.  The  specifications  would  be  something  like  those 
shown  in  the  order  form,  Fig.  9. 

This  order  should  be  made  in  triplicate.  The  original  and 
duplicate  will  go  to  the  printer,  the  duplicate  to  be  signed  and  re- 
turned as  an  acknowledgment  of  the  order,  while  the  triplicate  is 
filed  in  a  tickler  under  the  date  when  the  acknowledgment  should  be 
received — usually  the  following  day. 

138 


Order  No.  464 


To 


Date. 


to 


Ship 
Deliver . 

the  following 


Date  Wanted 


MUST  HAVE  OR   RETURN    ORDER 


SPECIFICATIONS 


Size. 


.Number  of  Pages... 


Type  -  Display  Lines . 
-Body 


ink-      Cover. 
Paper  ^ 


.inside. 


Cover  Stock. 
Blndm^g        . 


lUustrgitions 


f  herewith 
ito  come 


HENRY    SNOW   COMPANY 
By 


Received  above    order,  will  send  proofs, 
deliver   job 


Signed  . 


Department. 


.  Account . 


Fig.  9.     Triplicate  Form  of  Order  for  I'rintiug 
139 


14  ADVERTISING  AND  SALES 

When  the  chiphcate  comes  back  from  the  printer  it  is  placed 
in  the  tickler,  under  the  date  when  proofs  may  be  expected.  At  the 
same  time  the  triplicate  is  removed  from  the  tickler  and  placed  in  a 
ioose-leaf  binder,  all  copies  being  filed  in  numerical  sequence.  It 
will  be  noted  that,  at  the  bottom  of  the  triplicate,  the  department  or 
account  to  be  charged  is  entered,  this  record  being  made  when  the 
order  is  placed. 

^^^len  proofs  are  returned,  the  duplicate  is  moved  ahead  to  the 
promised  date  of  delivery.  In  this  way  the  follow-up  for  orders  is 
made  practically  automatic,  all  orders  filed  under  any  date  being 
removed  for  attention  on  that  day. 

Little  difficulty  is  experienced  in  getting  printers  to  put  the  order 
number  on  the  invoice,  when  requested  to  do  so.  The  return  of  two 
or  three  invoices  to  a  printer  who  neglects  this  will  have  the  desired 
effect.  ^Yith  the  numbers  on  the  invoices  it  is  a  very  simple  matter 
to  find  the  copy  of  the  order,  which  will  show  just  what  was  ordered 
and  for  what  department. 

Records  of  Printing.  A  record  of  all  printed  matter  received 
and  its  disposition  is  quite  as  important  as  for  any  other  class  of 
property.  Unless  properly  stored  and  correctly  recorded,  there  is 
likely  to  be  a  great  waste  of  stock.  Many  large  concerns  lose  much 
more  through  waste  in  this  direction  than  the  salary  of  a  competent 
stock  clerk.  Not  all  concerns  will  require  a  stock  clerk  for  this  pur- 
pose alone,  but  in  every  office  the  stock  of  printed  matter  should  be 
placed  in  charge  of  one  person — a  clerk,  perhaps,  who  has  other 
duties.  That  person  should  be  made  responsible  for  the  stock,  just 
as  the  stores  clerk  is  made  responsible  for  the  property  in  the  factory 
storeroom. 

When  printing  is  received,  it  should  be  first  checked  against  the 
order  copy  on  file,  and  then  put  in  the  storeroom,  or  sent  to  the  de- 
partment where  it  is  to  be  used  if  not  to  go  into  stock.  In  the  storage 
of  printing,  a  very  necessary  requirement  is  that  it  be  kept  clean, 
otherwise,  in  the  case  of  matter  carried  in  stock  for  a  long  period, 
there  may  be  as  much  as  a  ten  per  cent  loss  through  spoilage. 

It  is  best  to  have  all  printing  put  up  in  packages  of  specified  sizes, 
depending  on  the  quantities  used.  The  printer  will  usually  make 
the  size  of  his  packages  fit  the  needs  of  the  customer,  if  requested  to 
do  so.     On  the  outside  of  each  package,  the  name  and  quantity  of 

140 


141 


16  ADVERTISING  AND  SALES 

the  contents  should  be  recorded.  When  possible  a  sample  should 
be  attached. 

An  extensive  advertiser  will  require  a  good-sized  room  for  the 
storage  of  printing,  while  for  some  concerns  a  small  cabinet  will 
answer  the  purpose.  In  storing,  the  packages  should  be  arranged 
according  to  name,  maintaining  the  alphabetical  order  so  far  as 
possible.  A  numerical  arrangement,  by  form  numbers,  is  sometimes 
recommended,  but  any  filing  scheme  which  makes  it  necessary  to 
refer  to  a  supplementary  index  to  find  a  number  before  the  article 
itself  can  be  located  is  not  favored. 

A  low  stock  limit  should  be  set  for  every  piece  of  printing  that 
is  used  regularly  and  likely  to  be  re-ordered.  One  of  the  most  simple 
methods  of  handling  this  is  to  make  one  package  of  the  quantity  set, 
so  arranging  the  stock  that  it  w-ill  be  the  last  package  reached.  On 
the  outside  a  label  is  pasted — or  a  rubber  stamp  can  be  used — printed 
as  follows: 

This  package  must  not  be  opened  with- 
out first  notifying  the  office.  Failure  to 
observe  this  rule  will  be  considered  suf- 
ficient cause  for  instant  dismissal. 

After  the  storage  plan  has  been  arranged  then  comes  the  question 
of  stock  records.  A  simple  record  which  will  show  quantities  re- 
ceived, issued,  and  on  hand  is  needed.  The  form  shown  in  Fig.  10 
is  used  by  a  manufacturer  who  supplies  dealers,  who  are  his  customers, 
with  catalogs,  booklets,  and  other  forms  of  printing.  The  same  form 
is  adapted  for  use  by  a  concern  selling  through  branches  or  agencies, 
while  for  another  business,  the  form  would  be  modified,  eliminating 
records  of  shipments. 

This  form  is  printed  on  a  sheet  punched  for  a  loose-leaf  binder. 
A  sheet  is  used  for  each  catalog,  folder,  booklet,  circular,  mailing 
card,  or  other  piece  of  printing,  the  name  being  written  at  the  top  of 
the  sheet.  The  sheets  are  filed  in  alphabetical  order,  indexed  with 
suitably  tabbed  index  sheets. 

When  printing  is  received  and  the  order  checked,  the  name  and 
description  is  entered  at  the  head  of  one  of  these  sheets — except  in 
the  case  of  a  re-order,  when  a  sheet  will  be  found  in  the  binder. 
The  date,  quantity,  from  whom  received,  and  the  cost  are  next  re- 
corded in  the  proper  columns.     If  it  is  a  new  piece  of  printed  matter, 

142 


ADVERTISING  AND  SALES 


17 


the  quantity  received  is  also  entered  in  the  on  hand  column;  if  a 
reprint,  the  quantity  is  added  to  the  stock  on  hand  and  the  total 
extended. 

For  printing  that  is  to  be  sent  to  a  dealer,  an  order  is  entered  on 
the  form  shown  in  Fig.  11.  This  gives  detailed  instructions  for 
shipping,  with  the  quantity  and  description  of  the  matter  to  be  sent. 
The  order  is  made  in  duplicate.     The  original  goes  to  the  shipping 


o 

VIA 

NAME 

ADDRESS 

DATE                            REQUESTED  BY 

REMARKS 

QUAN. 

DESCRIPTION 

QUAN. 

DATE 

r^ 

U 

n 

o 

Fig.  1 1 .     Shipping  Order  for  Printing  to  be  Sent  to  a  Dealer 

clerk,  while  the  duplicate,  on  a  blank  sheet,  is  kept  in  the  office  as 
a  follow-up  on  the  shipping  clerk. 

As  shij)ments  are  made,  the  shipping  clerk  enters  in  the  columns 
provided  for  that  purpose,  the  quantity  sent  and  the  date.  When 
the  entire  order  is  filled,  it  is  returned  to  the  office.  Every  day  the 
duplicates  are  examined  and  inquiry  is  made  of  the  shipping  clerk 
regarding  any  orders  for  which  the  originals  have  not  been  returned. 
When  the  original  is  received,  the  duplicate  is  destroyed. 

Shipments  are  next  entered  on  the  stock  sheets,  while  the  original 
orders  are  filed  in  a  binder,  al[)habetically  by  dealers  names.  Refer- 
ence to  this  file  shows  exactly  what  advertising  matter  has  been  sent 
each  dealer. 


143 


18  ADVERTISING  AND  SALES 

PERIODICAL  ADVERTISING 

When  the  question  of  periodical  advertising  is  taken  up,  the  most 
important  of  all  publicity  fields  is  entered.  From  the  country  weekly, 
through  the  entire  list  of  city  dailies,  scientific  and  literary  weeklies 
and  monthlies,  popular  magazines,  class  magazines,  and  trade  papers 
for  every  vocation,  religious  papers,  and  reviews,  periodicals  can  be 
selected  which  will  reach  any  class  or  cover  any  territory.  With  the 
thousands  of  publications  to  select  from,  the  advertising  manager 
needs  to  know  which  ones  will  best  reach  the  people  he  wants  to 
reach;  what  papers  have  the  largest  circulations;  which  are  most 
popular  among  a  given  class  or  in  a  certain  territory.  He  must  be 
posted  on  rates  and  discounts,  that  he  may  cover  his  territory  econom- 
ically. And  added  to  this,  he  must  have  a  perfect  checking  system, 
that  he  may  know  to  a  certainty  what  returns  each  and  every  publica- 
tion is  bringing  him.  Such  a  system  may  show  him,  for  example, 
that  the  magazine  with  a  circulation  of  a  million  and  an  advertising 
rate  of  S5.00  a  line,  brings  orders  at  a  less  cost  than  another  in  which 
he  is  paying  but  S2.00  a  line — or  vice  versd.  Perhaps  the  cost  in 
both  is  within  the  amount  he  is  prepared  to  pay,  but  he  must  know 
what  it  costs,  that  he  may  know  where  to  increase  and  where  to  curtail 
the  appropriations. 

Rate  Cards.  Supposing  the  business  to  have  been  just  started, 
or  one  that  has  done  no  advertising — and  this  is  the  most  satisfactory 
premise  from  which  to  work,  in  laying  out  a  general  system  for  the 
department — among  the  first  duties  of  the  advertising  manager  will 
be  to  secure  information  about  mediums,  and  the  chief  source  of  in- 
formation will  be  the  publications  themselves,  as  they  will  respond 
promptly  to  requests  for  rate  cards. 

If  the  advertising  manager  gets  rate  cards  from  a  hundred  publica- 
tions, he  will  find  probably  forty  or  fifty  different  shapes,  sizes,  and 
styles.  Several  spasmodic  attempts  have  been  made  to  induce  pub- 
lishers to  adopt  a  uniform  size  for  rate  cards,  with  but  little  success. 
In  the  effort  to  produce  something  striking,  the  convenience  of  the 
advertiser  is  very  likely  to  be  overlooked.  One  publisher  will  use 
a  3"X5"  card — the  most  convenient  size;  another,  in  order  to  better 
display  the  artistic  ideas  of  his  own  copy  department,  uses  a  card 

144 


ADVERTISING  AND  SALES  19 

6"X9";  a  book  of  rules  is  issued  by  another;  the  result  is  a  miscella- 
neous collection  that  does  not  fit  any  size  of  file  made. 

To  insure  uniformity  in  their  files,  advertising  agencies  have 
been  obliged  to  design  rate  sheets  or  cards  which  they  send  to  the 
publisher  to  be  filled  in.  Some  large  advertisers  now  follow  the 
same  plan,  requesting  publishers  to  enter  rates  on  special  forms. 

But  whether  or  not  he  uses  a  special  form,  every  advertiser  should 
have  his  own  file  of  rate  cards — even  if  the  information  is  written  on 
a  blank  card.  The  special  information  needed  is  shown  in  Fig.  12. 
This  can  be  on  a  card,  or  if  preferred,  a  sheet  to  be  filed  in  a  loose-leaf 


puRi  ir.ATinw 

,«»imi   IRHF-R 

PAGE  RATE 

LINE  RATE 

SPACE    DISC. 

CASH  DISC. 

AGCY   DISC. 

HEIGHT  PAGE 

NO.  COLS. 

COL.  WIDTH 

LINES  to  PAGE 

HALFTONE  SCREEN 

USE  KATRICES 

CLAIMED  CIRCULATION 

CLASS 

TERRITORY    COVERED 

Fig.  12.     Index  Card  for  a  Record  of  Advertising  Rates 

i)inder  can  be  used.  The  cards  or  sheets  should  be  indexed  alpha- 
betically, under  the  names  of  the  publications. 

If  full  and  satisfactory  information  is  not  obtained  from  the 
publi-shers,  it  is  well  to  supplement  it  with  information  from  an  ad- 
vertising agency.  The  successful  agency,  through  observation  on 
behalf  of  a  number  of  clients,  usually  has  more  dependable  informa- 
tion about  a  given  publication  than  can  be  obtained  by  any  one 
advertiser. 

All  sources  of  information  should  be  made  use  of;  if  (he  article 
advertised  is  sold  to  the  trade,  much  valuable  informafioii  can  be 
secured  from  local  dealers.  In  planning  a  daily  paj)cr  ("nn])aign 
for  a  certain  commodity,  a  letter  was  sent  to  each  dealer  contiguous 

145 


20  ADVERTISING  AND  SALES 

to  each  city  asking  what  morning  and  evening  papers  had  the  largest 
sale  in  his  town;  at  what  hour  each  was  received;  and  the  general 
trend  of  local  political  sentiment.  This  brought  a  gratifying  response, 
and  helped  in  the  selection  of  papers  which  covered,  not  only  the 
cities,  hut  the  small  towns.  Another  advertiser  secured  some  very 
satisfactory  reports  from  his  traveling  salesmen,  relative  to  the  value 
of  local  papers  in  which  he  contemplated  advertising. 

Advertising  Contracts.  Contracts  for  advertising  are  usually 
made  once  a  year,  in  advance.  ]\Iost  publishers  of  magazines  and 
newspapers  grant  certain  space  discounts,  based  on  the  space  used 
within  one  year,  and  in  many  cases,  to  secure  these  discounts,  con- 
tracts must  be  made  in  advance.  Some  trade  paper  publishers  allow 
space  discounts,  others  maintain  flat  rates,  all  of  which  must  be  con- 
sidered in  making  contracts. 

Practically  all  magazines,  most  newspapers,  and  some  trade 
papers,  allow  special  discounts  or  commissions  to  advertising  agencies 
— though  in  the  case  of  newspapers,  in  many  cities,  this  discount 
applies  only  to  foreign  advertising,  or  that  originating  outside  of  the 
city  of  publication. 

An  increasing  number  of  advertisers  are  placing  contracts  for 
space  through  the  agencies,  and  relying  largely  on  the  advice  of  the 
agency  in  the  selection  of  mediums.  Since  the  business  of  the  largest 
and  most  successful  advertisers  is  placed  through  the  agencies,  it 
would  seem  to  be  a  safe  rule  to  follow.  But  because  an  agency 
handles  the  orders,  the  shrewd  advertising  manager  will  not  relax 
in  his  watchfulness  of  his  employer's  interests.  He  will  maintain 
just  as  complete  a  rate  file,  and  watch  the  bills  as  closely  as  though 
dealing  direct  with  publishers. 

The  experienced  advertiser  plans  his  campaigns  well  in  advance, 
making  annual  appropriations  for  all  advertising.  This  enables 
the  advertising  manager  to  select  mediums,  determine  the  amount 
to  be  used  in  each  class,  and  prepare  suitable  copy  for  the  different 
publications. 

This  question  of  the  preparation  of  copy  for  series  of  ads  applies 
especially  to  national  campaigns  and  local  advertising  of  a  general 
publicity  nature.  The  advertising  manager  of  a  department  store 
is  obliged  to  prepare  newspaper  copy  daily,  and  at  best  can  plan  his 
copy  not  more  than  two  or  three  days  in  advance.     In  a  national 

146 


ADVERTISING  AND  SALES 


21 


campaign  in  which  advertising  is  for  direct  returns,  copy  must  be 
tried  out  and  its  character  changed  frequently.  This  does  not  mean 
that,  in  any  case,  the  same  copy  should  be  run  indefinitely;  it  should 
be  changed  in  practically  every  issue.  While  following  the  general 
style  adopted  for  the  house,  there  should  be  something  new  in  every 
issue — something  that  will  attract  and  cause  the  reader  to  look  for 
the  ad  each  month. 

WTien  the  amount  of  the  appropriation  has  been  decided,  a 
schedule  of  the  mediums  to  be  used  should  be  made.     This  schedule 


o 

SCMEIDULE  yo'- 

MONTH 

o^ 

PUBS. 

PREVIOUS 

SPACE 

COST 

TOTAL 

INQ.J  SALES 

COST 

ARTICLES 

n 

r\ 

U 

n 

\j 

Fig.  13.     Schedule  of  Montlily  Insertions  in  Periodicals 

should  include  the  space  to  be  used  in  e/ich  publication  Indeed, 
the  schedule  of  mediums  and  space  that  it  is  desired  to  use,  often 
determines  the  appropriation.  For  a  general  publicity  campaign, 
this  schedule  can  be  made  absolute,  but  when  the  advertising  is  for 
direct  returns,  it  should  be  elastic.  INIediums  which  do  not  pay  after 
a  fair  trial,  should  be  dropped,  and  there  should  be  room  in  the 
schedule  for  mediums  not  at  first  included.  Cliaiifrcd  conditions 
may  make  it  advisable  to  add  a  medium  which  previously  has  been 
unprofitable. 


147 


American  School   of  Correspondence 


Advertising  Order 
IVo. 

Publishers   


Chicago,   111., 


-19. 


Please  insert  enclosed  ad- 
vertisement in  space  of_ 


lines     ) 

inches  >  Copy    No.. 

page     ) 


Key  No. 


This  adTertlsement  must  NOT  BE  REPEATED  without  our  order 


This  space  to  be  billed  to 


Terms:    (In  case  of  question  HOLD  ORDER  and  'K'rite  ns  at  once) 


Position  I  requested  f 
Jr-osition  I  ordered      i 


POSITIONS 

Top  of  column  and  wholly  alongside  pure 

reading  matter  or  first  tollowing  and  v/hoJly 

alongside  of  pure  reading  matter. 

Right-hand  page,  outside  column. 

Front  of  Magazine. 

Back  of  Magazine. 

Schools  and  Colleges. 

As  stipulated  in  contract. 

No  two  of  our  ads  to  appear  on  same  or 

opposite  pages.     Must  not  appear  on  back 

of  any  other  **ad"  coataining  a  coupon  or 

Cor.  School  "ad.** 

Classified. 


-Conditions, 

see  below 

CONDITIO-S 

Advertisements  must  hare  our 
O.  K.  before  insertion.  Bill  will 
not  be  approved  otherwise,  un- 
less proof  waived  by  us. 

Key  number  of  electrotj'pe  (or  copy.  Uset 
matter)  must  correspond  with  Key  number 
above  before  inserting. 

Send proofs. 


THIS  ORDER  can  be  DISCONTINl  ED  or  CANCELIiED  at  any  time 
by  paying  for  SPACE  USED  at  the  rates  in  force  at  the  date  of  order. 
ADDITIOXAI.  SPACE  pro  rata.  REBATE  to  be  given  if  total  space 
or  insf-nions  in  one  year  earn  additional  DISCOUNTS.  MTE  RESERVE 
THE  RIGHT  to  change  copy  at  any  time. 


IMPORTANT 


It  is  a  condition  of  this  order  that  OUR  NAIflE  and  ad- 
dress be  immediately  placed  upon  your  mailing  list  so 
that  we  will  receive  your  publication  regularly.  This  will 
in.sure  prompt  settlement  of  your  bill. 


Original  Out  No- 
Electrotype  No._ 


Delivered  by  j  ^^jJess  i  <"  ^°t 
In  perfect  condition  hold  order 
and  send  for  new  cut.) 


Yours  truly, 

American  School  of  Correspondence 

By 


Fig.  14.     Order  Blank  Used  for  Ordering  Insertions  of  Advertising  Copy 


ADVERTISING  AND  SALES  23 

The  advertiser  who  advertises  for  direct  inquiries  or  orders, 
usually  finds  it  necessary  to  revise  his  schedule  monthly,  basing  each 
schedule  on  previous  results.  That  he  may  act  intelligently,  he  must 
have  an  exact  record  of  past  results.  A  convenient  form  for  the 
monthly  schedule  is  shown  in  Fig.  13,  which  is  printed  on  a  sheet 
punched  for  filing  in  a  loose-leaf  binder. 

Previous  results  from  each  publication  on  each  class  of  goods 
is  shown  in  respect  to  inquires,  amount  of  sales,  and  cost  of  the  ad- 
vertising. In  the  three  columns  at  the  right  of  the  space  for  each  ad, 
cost  of  each,  and  total  cost  are  shown. 

Separate  sheets  are  used  for  popular  magazines,  trade  papers, 
and  newspapers.  A\Tien  copy  has  been  sent,  the  sheets  are  placed  in 
a  loose-leaf  binder,  the  full  schedule  for  each  month  being  in  one  place 
where  it  can  be  readily  referred  to. 

Orders  for  Insertion.  When  an  agency  is  employed,  the  agency 
usually  sends  copy  and  orders  for  insertion  to  the  publisher;  though 
some  advertisers  prefer  to  send  copy  direct,  leaving  the  agency  to 
send  orders  for  insertion.  It  usually  happens,  too,  that  some  orders 
are  sent  direct  instead  of  through  the  agency.  One  large  advertiser 
follows  the  practice  of  sending  orders  direct  to  those  publishers  who 
do  not  allow  agency  commissions,  all  others  going  through  the 
agency. 

If  orders  are  to  be  sent  direct,  a  special  advertising  order  blank 
should  be  provided.  This  order  should  specify  to  the  last  detail  the 
conditions  of  the  order.  A  blank,  which  is  self-explanatory,  is  shown 
in  Fig.  14.  The  order  is  made  in  duplicate  and  the  copy  is  filed  under 
the  name  of  the  pu})lication. 

Checking  Returns.  A  necessity  to  the  advertising  department 
is  an  efficient  system  of  checking  and  recording  returns  from  adver- 
tising. Without  a  checking  system  on  which  he  can  depend,  the 
advertising  manager  is  spending  his  employer's  money  blindly — he 
does  not  know  what  he  is  getting  for  it. 

The  first  requirement  in  devising  a  system  is  a  method  of  hcijing 
ads,  that  inquiries  or  orders  may  be  identified  and  credited  to  the 
proper  mediums.  Keying  systems  there  are  without  number — to 
describe  all  of  tlicm  would  ro((uire  a  book  the  size  of  lliis  one  -  but 
those  most  coniinonly  used  are  adaptations  in  one  form  or  another, 
of  the  idea  of  changing  the  address. 

149 


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ADVERTISING  AND  SALES  25 

One  of  the  oldest  methods  is  to  use  a  department  number  or 
letter  in  the  address,  changing  the  number  in  each  publication  in 
which  the  ad  appears — the  address  in  one  would  be  Dept.  A;  in  an- 
other, Dept.  B.  This  method  is  used  successfully  by  some  advertisers, 
but  it  has  its  objections.  Most  people  realize  that  no  concern  is  so 
large  that  an  inquiry  will  not  reach  the  proper  department.  If,  for 
example,  an  inquiry  in  response  to  a  beef  extract  ad,  addressed  to 
Swift  &  Co.,  failed  to  reach  the  beef  extract  department,  it  would 
indicate  a  very  lax  system  of  handling  correspondence. 

Changing  street  numbers,  room  numbers,  or  postoflBce  box 
numbers,  is  another  common  method  of  keying.  This  can  be  operated 
successfully  by  notifying  the  local  postal  authorities  that  all  mail  is 
to  be  delivered  at  one  number,  regardless  of  the  address. 

An  adaptation  of  the  number  key,  which  can  be  used  to  advan-' 
tage  for  a  small  number  of  publications,  is  a  combination  of  numbers 
representing  publications  and  dates.  First,  the  publications  are 
numbered,  these  numbers  being  used  as  the  first  part  of  the  address. 
To  the  publication  number  is  added  the  number  of  the  month  or  week 
of  publication.     To  illustrate: 

Suppose  that  the  Technical  World  is 
No.  5  on  the  list  and  the  ad  is  run  in 
October.  The  key  number  would  be 
510 — 5  standing  for  the  publication  and  10 
for  the  month.  All  replies  with  that  ad- 
dress would  be  credited  to  the  Technical 
World  for  October. 

In  using  this  system  it  is  necessary  to  use  some  figure — usually 
0 — for  a  repeater  to  avoid  confusion;  No.  112  might  mean  publica- 
tion No.  1,  month  No.  12,  or  publication  No.  11,  month  No.  2.  By 
adding  a  naught  after  the  publication  No.,  confusion  is  avoided — 
1102  would  mean  No.  11,  2nd  month,  10012  would  indicate  No.  10, 
12th  month.  The  system  can  be  further  varied  by  using  N.,  S.,  E., 
and  W.,  or  by  substituting  Ave.  for  St.  or  vice  versd.  • 

When  readers  are  requested  to  ask  for  catalogs  or  other  printed 
matter,  the  numbers  by  which  these  are  known  to  the  reader  can  be 
used  for  the  key — as  bulletin  A,  bulletin  B,  etc. 

For  either  direct  inquiries  or  orders  one  of  the  most  popular 
and  satisfactory  keying  systems  is  to  use  a  coupon,  indicating  the 


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ADVERTISING  AND  SALES  27 

publication  and  month  in  the  coupon — T  W  11  printed  in  small 
type  in  the  coupon  would  mean  Technical  World  for  November. 

A  coupon  to  be  filled  in  offers  the  reader  a  convenient  means  of 
answering  the  ad,  and  this  has  a  tendency  to  induce  a  larger  number 
of  replies.  Few  people  will  fail  to  use  the  coupon  or  the  address 
given  A  certain  very  large  advertiser,  who  uses  the  coupon,  states 
that  less  than  one  per  cent  of  his  replies  are  without  means  of  identifica- 
tion; either  the  coupon  is  used  or  the  name  of  the  magazine  is  men- 
tioned. 

To  make  their  checking  systems  as  nearly  perfect  as  possible, 
some  advertisers  wi'ite  to  all  readers  who  fail  to  use  the  key,  request- 
ing them  to  state  where  the  ad  was  seen.  Some  enclose  a  postal  for 
the  reply,  others  enclose  a  printed  slip,  on  which  the  magazines  used 
are  listed,  to  be  checked  and  returned. 

A  reasonable  expense  is  justified  to  find  out  where  replies  do 
come  from,  for  it  is  as  much  to  the  advertiser's  interest  to  continue 
the  use  of  all  profitable  mediums  as  to  drop  the  unprofitable  ones. 
Many  of  the  most  successful  advertisers,  however,  consider  it  safe 
to  distribute  unidentified  replies  pro  rata,  basing  the  distribution  on 
the  number  of  keyed  replies — that  is,  if  30  per  cent  of  all  keyed  replies 
can  be  traced  to  the  Technical  World,  that  magazine  will  be  credited 
with  30  per  cent  of  all  unidentified  replies. 

When  the  mail  is  opened  all  replies  should  be  sorted  by  key 
numbers,  inquiries  and  orders  separated.  Then  the  total  number 
of  inquiries,  and  number  and  amount  of  orders  from  each  publica- 
tion should  be  ascertained  and  credited. 

For  recording  credits  a  form,  similar  to  the  one  shown  in  Fig.  15, 
should  be  used.  This  may  be  on  a  card  or  in  loose  leaf.  A  card  is 
used  for  each  ad,  in  each  publication — that  is,  if  there  are  seven 
insertions  in  the  Technical  World  in  one  year,  seven  record  cards 
will  be  used — one  for  each  insertion.  These  cards  or  sheets  are  to 
be  filed  under  the  names  of  the  publications. 

On  the  back  of  the  card  the  form  shown  in  Fig.  10,  is  printed. 
This  provides  for  a  daily  record  of  sales  resulting  from  the  in(juiries 
recorded  on  the  face,  or  from  (he  ad  if  it  calls  for  direct  orders.  These 
forms  su{)ply  all  necessary  data  for  a  comf)lete  statistical  record  for 
each  publication.  Too  much  time  would  Ije  rccjuired  to  look  through 
all  of  these  cards  every  time  information  is  desired  about  a  given  pub- 

153 


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AD\^RTISING  AND  SALES 


29 


Hcation;  a  more  condensed  record  of  total  results  should  be  provided. 
All  of  the  information  of  practical  value  can  be  combined  with 
a  record  of  insertions  on  the  form  shown  in  Fig.  17,  using  a  sheet  for 
each  publication.  The  record  includes  the  date  of  order,  space,  sub- 
ject, copy  No.,  cut  No.,  dates  of  insertion,  checking,  and  proofreading, 
the  date  and  amount  of  bill,  and  the  number,  amount,  and  average 


WEATHER                                                                                                YEAR 

SPECIAL  EVENTS                                                                                 MONTH 

DAY  27^  MONTH 

DAY  <?f  WEEK 

DEPARTMENT 

SALES                1 

ADVERTISED 

NOTAOVERTISEDl 

Fig.  18.     Daily  Record  of  Sales  of  xVdvertised  Goods  in  a  Retail  Store 

cost  of  sales.  The  record  of  sales  should  be  entered  monthly  from 
the  detail  record. 

These  sheets  are  filed  in  a  loose-leaf  binder,  indexed  alpha- 
betically under  the  names  of  the  publications.  One  sheet  will  accom- 
modate the  full  yearly  schedule  for  a  monthly  or  weekly  publication. 

Retail  Advertising  Returns.  To  check  returns  from  retail  ad- 
vertising is  quite  a  different  problem  from  checking  returns  from 
keyed  ads  in  monthly  magazines.  There  are  no  keys,  and  no  mail 
inquiries  to  be  traced.     But  a  record  of  general  results  is  very  desir- 


166 


30 


ADVERTISING  AND  SALES 


able,  and  it  is  possible  to  obtain  records  which  will,  at  least,  indicate 
the  increase  in  sales  due  to  advertising. 

Results  of  retail  advertising  must  be  measured  by  comparison; 
if  a  department  store  advertises  handkerchiefs  as  a  leader  for  Tuesday, 
oil  handkerchief  sales  for  that  day  would  not  be  due  to  the  adver- 
tising, but  it  is  legitimate  to  credit  advertising  with  any  increase  over 
normal  sales.  If  correct  sales  records  are  kept,  it  will  be  possible  to 
tell  the  exact  amount  of  handkerchief  sales  for  that  and  every  other 
day  in  the  year. 


o 

CITY                                                ST/^TF                                               ARFNOY                                          T 
SHIP  CARnS   TD                                                                                        VIA                                                   ' 

DATE  S^COr 

sJTRACT                                                                              FXP 

IRES. 

MO. 

COPY 

NO. 

SUBJECT 

SIZE 
CARD 

CARS  ON 
CONTRACT 

EXTRA 
SERVICE 

TOTAL 
SHIPPED 

DATE 
SMIPPED 

GROSS 
COST 

NET 
CASH 

o 

Jan. 

Feb. 

March 

April 

May 

June 

July 

Aug. 

Sep. 

n 

Oct. 

Nov. 

Dec 

n 

Total 

Fig.  19.     Detailed  Record  of  the  Sliipment  of  Street  Car  Cards 

A  close  check  on  returns  can  also  be  obtained  by  requiring  each 
sales  person  to  put  a  distinguishing  mark  of  some  kind  on  sales  for 
advertised  articles.  Proofs  of  the  day's  ads,  showing  the  articles 
advertised  in  the  department,  should  be  mounted  on  cards  and  hung 
in  each  department,  that  the  sales  person  may  know  when  advertised 
goods  are  sold.  If  made  large  enough,  the  card  can  be  ruled  for  a 
tally  of  sales,  and  each  sale  of  advertised  goods  tallied. 

There  should  be  an  ofRce  record  showing  the  results  of  adver- 
tising for  each  department.     In  comparing  these  records  sales  alone 


156 


ADVERTISING  AND  SALES 


31 


cannot  be  used,  for  the  weather,  and  unusual  events  calculated  to 
increase  the  crowds  in  town,  must  be  considered.  To-day's  sales 
of  an  advertised  article,  with  unfavorable  weather  conditions,  prob- 
ably will  not  equal  the  sales  of  the  same  article  one  year  ago,  which  was 
circus  day.  If  daily  records,  similar  to  that  provided  in  the  form 
shown  in  Fig.  18,  are  kept,  they  will  soon  become  very  valuable  to 
the  advertising  department  of  any  retail  store. 


TOTAL  COST 

DETAIUS    "=/"     CONTRACT 

DATE 
INV. 

MO. 

GROSS 

NEIT 

CREDITS 

o 

Jan. 

Feb. 

n 

March 

April 

May 

June 

Julv 

Aug 

Sep. 

Oct. 

O 

NOV. 

Dec 

Total 

o 

1 

Fig.  20.     Reccd  of  Street  Car  Contract  and  Net  Costs 


STREET  CAR  ADVERTISING 

Street  car  advertising  is  of  a  general  publicity  nature.  It  is 
intended,  not  to  secure  direct  orders,  but  to  influence  sales  by  keep- 
ing the  name  of  a  commodity  before  the  public.  It  is  local  in  its 
effects,  influencing  sales  only  in  the  cities  in  which  the  cards  are  used. 

Street  car  advertising  is  now  controlled  by  a  small  number  of 
agencies,  who  own  the  space  in  the  cars  in  the  different  cities  through- 
o(jt  the  country.  Through  one  of  these  agencies,  contracts  can  be 
made  for  space  in  street  cars  in  any  city  in  the  country. 


157 


32  ADVERTISING  AND  SALES 

The  rate  for  street  car  advertising  is  based  primarily  on  popula- 
tion, the  circulation  consisting  of  the  number  of  passengers  carried. 
\Mien  the  advertiser  buys  space,  he  pays  for  having  his  card  appear 
in  a  specified  number  of  cars,  for  a  stated  period.  As  a  rule,  the  rate 
is  for  monthly  periods,  with  special  discounts  on  yearly  contracts, 
and  cards  are  changed  each  month.  On  certain  contracts  the  agency 
will  include  extra  service,  without  additional  cost,  by  running  cards 
in  a  number  of  extra  cars,  which  are  put  on  during  the  rush  hours. 

If  desired,  the  agency  will  design  the  copy  and  print  the  cards, 
making  an  additional  charge  for  the  service.  Many  street  car  ad- 
vertisers prefer,  however,  to  furnish  their  own  cards.  This  is  prob- 
ably the  better  plan  for  advertisers  who  maintain  eflScient  copy  de- 
partments. 

Although  this  book  is  not  intended  to  teach  the  technical  details 
of  the  art  of  preparing  copy,  it  may  not  be  out  of  place  to  suggest  that 
copy  for  street  car  cards  is  in  a  class  l^y  itself.  Experienced  adver- 
tisers have  found  that  to  use  wordy  arguments  on  a  street  car  card 
is  a  mistake.  The  card  must  catch  the  eye,  for  it  is  expected  to  arrest 
the  attention  but  a  moment  at  best.  A  picture  that  tells  the  story 
at  a  glance,  large  type,  and  plenty  of  color  seem  to  meet  with  most 
favor. 

The  special  records  required  for  street  car  advertising  are  simple, 
consisting  of  records  of  contracts.  A  form  for  such  a  record  is  shown 
in  Fig.  19.  This  can  be  on  a  card  or  loose  leaf.  The  form  is  headed 
with  the  name  of  the  city  and  instructions  for  shipping.  Below  the 
heading,  is  a  monthly  record  of  the  copy  No.,  subject  of  the  ad, 
size  of  cards,  and  other  necessary  data  including  the  gross  and  net 
cost.  On  the  reverse,  Fig.  20,  is  a  detailed  record  of  the  contract, 
and  a  record  of  total  costs.  These  sheets  are  filed  in  a  binder  or  in 
a  card  tray,  indexed  by  cities. 

OUTDOOR  ADVERTISING 

Outdoor  advertising  is  the  term  used  to  describe  all  such  forms 
of  publicity  as  bill  boards,  signs,  painted  or  printed  posters,  etc. 
This  is  strictly  general  publicity  advertising. 

Like  street  car  advertising,  outdoor  advertising  is  thoroughly 
organized,  and  the  sale  of  space  is  practically  controlled  by  a  few 

158 


ADVERTISING  AND  SALES  33 

companies.  Local  bill  posters,  who  control  the  boards,  or  stands, 
as  they  are  technically  known,  have  their  own  national  organization 
which  standardizes  the  practices  of  the  business,  regulates  rates,  and 
insures  the  advertiser  against  paying  for  service  that  he  does  not 
receive. 

Rates  for  this  class  of  advertising  are  based  on  population  and 
the  relative  desirability  of  the  location.  In  a  city  of  500,000  popu- 
lation, a  stand  which  150,000  people  pass  daily  is  worth  more  than 
one  in  another  section  of  the  city,  w^hich  is  seen  but  by  50,000  people. 

The  advertiser  pays  for  his  space  on  the  basis  of  the  number  of 
stands  used,  size  of  posters  or  signs,  relative  number  of  down  town 
or  preferred  position  stands,  and  length  of  sersace.  Rates  are  figured 
for  periods  of  one  week,  two  weeks,  one  month,  and  longer. 

The  records  of  outdoor  advertising  are  very  similar  to  those  of 
street  car  advertising.  By  changing  the  column  headings  of  Fig. 
19  from  cars  to  stands,  the  form  shown  answers  every  requirement. 

No  outdoor  or  street  car  advertising  campaign  of  national 
scope  should  be  undertaken  until  provision  has  been  made  to  take 
care  of  the  business.  The  trade  must  be  covered  first;  when  the  ad 
appears  on  the  boards  the  goods  must  be  on  the  dealers'  shelves. 

Indeed,  this  is  a  most  important  factor  in  any  publicity  cam- 
paign intended  to  create  a  demand  for  goods  sold  through  the  retailer. 
Every  possible  preparation  must  be  made  in  advance  to  secure  a  wide 
distribution  so  that  the  consumer  attracted  by  the  ad  will  find  it  easy 
to  buy  the  goods.  Making  known  the  name  of  an  article  in  a  locality 
where  it  is  not  carried  in  stock,  or  without  telling  the  consumer  where 
it  can  be  bought,  can  result  in  little  advantage  to  the  manufacturer. 

WHERE  ADVERTISING  AND  SALESMANSHIP  MEET 

A  very  effective  method  of  producing  sales — most  largely  used 
in  campaigns  intended  to  secure  direct  orders,  by  mail — is  the  use  of 
circulars,  booklets,  and  form  letters.  This  literature  is  advertising, 
but  to  use  it  to  secure  the  best  results  requires  the  application  of  a 
certain  amount  of  salesmanship.  The  advertising  man  may  prepare 
an  attractive  piece  of  printed  matter,  well-written  and  containing 
convincing  arguments,  but  unless  judiciously  used,  the  time  and 
study  put  into  its  preparation  is  wasted. 

159 


34  ADVERTISING  AND  SALES 

A  large  quantity  of  such  literature,  distributed  indiscriminately, 
would  probably  bring  some  business,  but  the  best  results  are  obtain- 
able only  when  its  use  is  concentrated;  when  it  is  confined  to  a  par- 
ticular class  and  followed  up  in  a  systematic  manner.  Knowing  his 
goods  and  the  class  of  people  who  use  them,  the  salesman  is  naturally 
the  best  judge  of  where  and  when  to  use  those  forms  of  advertising 
which  he  turns  into  salesmanship  by  mail.  The  discussion  of 
systems  of  record  and  methods  of  use  of  this  form  of  literature  is 
taken  up  under  the  head  of  the  sales  department. 

SALES   DEPARTMENT 

The  sales  department  proper  is  in  charge  of  a  sales  manager, 
who  has  immediate  authority  over  his  subordinates  and  is  responsible 
for  the  results  secured  by  his  department.  No  position  in  the  busi- 
ness organization  carries  with  it  greater  responsibilities,  for  on  the 
sales  manager  rests  the  burden  of  marketing  the  goods  at  a  profit. 

Without  entering  into  a  discussion  of  the  science  of  salesmanship, 
the  writer  takes  the  liberty  of  suggesting  some  necessary  qualifications 
of  a  sales  manager. 

He  must  be  thoroughly  imbued  with  the  importance  of  his  work 
and  have  an  abiding  faith  in  his  abilitv  to  get  the  verv  best  results 
out  of  his  department.  He  must  be  enthusiastic  and  capable  of  im- 
parting his  enthusiasm  to  others. 

He  must  k)wic  the  goods,  be  they  pianos  or  investment  bonds. 
He  must  believe  in  his  goods  and  his  house.  Unless  he  feels  that  his 
house  is  the  best  on  earth  and  offers  goods  second  to  none,  he  cannot 
produce  the  full  measure  of  results  of  which  he  is  capable. 

He  must  know  the  goods  of  his  competitor  and  what  methods 
his  competitors  are  using.  He  must  be  willing  to  abandon  his  own 
pet  schemes  when  they  fail  to  produce,  or  to  adopt  a  new  plan,  even 
though  originated  by  another. 

He  must  be  a  close  student  of  human  nature  with  the  capacity 
for  judging  men.  He  must  be  a  salesman  in  every  sense  else  he  is  in 
no  position  to  judge  the  qualifications  of  those  in  his  employ. 


160 


ADVERTISING  ANT>  SALES  35 

On  the  other  hand,  the  sales  manager  should  be  given  full  con- 
trol of  his  department,  until  he  proves  to  be  incompetent.  While 
other  members  of  the  organization  will  be  consulted  before  a  new 
campaign  is  launched,  when  the  plans  have  been  approved  he  should 
be  permitted  to  try  them  out  w^ithout  interference.  Assuming  that 
he  is  a  competent  man  in  the  first  place,  he  will  be  the  first  to  detect 
the  weak  points  and  set  about  to  find  a  way  to  strengthen  them. 

Many  a  sales  manager  has  had  his  usefulness  impaired  by  the 
interference  of  others  before  he  has  had  an  opportunity  to  give  a 
selling  plan  a  fair  trial.  Selling  campaigns  have  been  discontinued 
before  the  turning  point  was  reached,  because  someone  higher  in 
authority  lacked  faith;  when  they  would  have  proved  successful,  if 
carried  out  as  originally  planned. 

This  is  not  an  argument  for  a  stubborn  adherence  to  plans, 
regardless  of  consequence — any  sales  committee  is  liable  to  make 
errors — but  before  the  campaign  is  launched  the  extent  to  w^iich  it 
shall  be  tried  out  should  be  decided.  If  the  sales  manager  is  given 
an  appropriation  of  $500.00,  or  $5,000.00,  for  a  trial,  he  can  work 
intelligently,  but  if  told  to  go  ahead,  and  then  ordered  to  stop  before 
his  campaign  is  well  under  way,  he  should  not  be  charged  with  a 
failure. 

Another  thing  that  the  sales  manager  should  control  is  the  ques- 
tion of  salaries  paid  to  the  salesmen.  We  maintain  that  the  amount 
of  salary  paid  to  a  salesman  is  of  no  moment  provided  he  is  a  profit- 
able man.  A  $10,000.00  man  wOio  sells  goods  at  a  cost  of  10%  is 
more  profitable  than  the  $5,000.00  man  who  sells  at  10%,  or  even 
9%.,  because  of  the  greater  volumes  of  his  business.  The  management 
should  gauge  the  sales  department  by  net  costs,  not  by  the  amount  of 
individual  salaries. 

BRANCHES  OF  SALES  DEPARTMENT 

The  sales  department  is  logically  divided  into  two  branches — 
mail  order  and  personal  salesmanship.  The  mail  order  branch  is 
that  part  of  the  organization  which  has  to  do  willi  the  promotion  of 
sales  by  mail.  The  personal  salesmanshij)  branch  is  the  division 
which  makes  sales  by  personal  contact  with  the  customer. 

The  work  of  the  mail  order  branch  is  conducted  by  correspond- 

161 


36  ADVERTISING  AND  SALES 

ents — ^letter  salesmen — assisted  by  clerks  to  look  after  the  routine  of 
the  department. 

The  personal  salesmanship  branch  is  conducted,  primarily,  by 
salesmen  who  visit  the  customers  and  personally  sell  goods.  In 
many  lines,  the  personal  salesmanship  branch  is  supplemented  by 
agencies,  who  come  in  direct  contact  with  the  customer. 

There  are  businesses  in  which  the  dealers,  who  carry  the  goods 
in  stock,  are  assisted  by  both  the  mail  order  and  personal  salesman- 
ship branches  in  making  the  sale  to  the  customer.  An  example  is 
the  piano  business  in  which  inquiries  are  referred  to  dealers,  the 
dealer  and  prospective  customer  followed  up  by  mail,  and  the  travel- 
ing salesman  sent  to  assist  the  dealer  to  close  the  sale. 

THE  MAIL  ORDER  BRANCH 

When  the  mail  order  branch  is  spoken  of  it  does  not  refer  neces- 
sarily to  an  exclusive  mail  order  business,  but  the  term  is  used  to 
identify  the  department  in  any  concern  which  uses  the  mails  to  promote 
sales.  AMiile  there  are  many  exclusive  mail  order  houses,  employing 
no  personal  salesmen,  there  are  practically  no  exclusively  personal 
salesmanship  houses.  There  may  be  no  effort  to  secure  direct  orders 
in  this  manner,  but  the  mails  are  used  to  influence  sales.  Extensive 
circularizing  campaigns  are  conducted  for  the  purpose  of  making 
known  to  the  consumer  the  merits  of  certain  commodities,  wiiich  are 
sold  only  through  dealers.  In  the  sense  here  used,  such  campaigns 
are  within  the  province  of  the  mail  order  branch. 

Form  Letters.  An  important  factor  in  the  conduct  of  the  mail 
order  branch,  is  the  use  of  form  letters.  In  a  campaign  intended 
to  secure  direct  orders,  the  form  letter  takes  the  place  of  the  personal 
salesman. 

The  form  letter  presupposes  a  uniformity  of  conditions.  It  is 
written  to  appeal  to  certain  desires  of  the  recipient;  its  arguments 
are  based  on  the  supposition  that  the  same  desire  exists  in  the  minds 
of  all  to  whom  it  is  sent,  and  that  the  same  arguments  will  cause  its 
readers,  as  a  class,  to  yield  to  those  desires. 

The  result  of  a  form  letter  campaign  depends  on  the  extent  to 
which  the  letter  fulfills  its  mission  in  adapting  itself  to  the  conditions 
of  the  class  to  which  it  is  sent — its  adaptability  to  the  mentality  and 

162 


ADVERTISING  AND  SALES  37 

environment  of  its  readers.     The  same  argument  will  not  appeal  to 
the  mechanic,  farmer,  merchant,  and  banker. 

The  failure  of  most  form  letter  campaigns  can  be  traced  to  one 
of  two  causes — failure  to  adapt  the  letter  to  existing  conditions,  or 
lack  of  judgment  in  selecting  a  list  for  a  trial.  The  goods  offered 
may  be  used  by  plumbers  and  lawyers,  but  the  same  letter  should 
not  be  expected  to  pull  with  both  classes.  Like  the  selling  talk  of 
the  personal  salesman,  the  letter  should  be  changed  for  each  class. 

Other  conditions,  also,  must  be  studied.  Iowa  may  have  har- 
vested a  bumper  crop,  while  Kansas  suffers  from  a  drought;  mills 
in  the  Pittsburg  district  may  be  running  overtime,  while  Buffalo  is 
in  the  midst  of  local  labor  disturbances.  All  of  these  local  conditions 
influence  the  results  of  the  letter  campaign. 

As  to  lists  used  for  trials,  the  more  usual  mistake  is  in  the  use  of 
too  small  a  list.  Some  sales  managers,  who  have  mailing  lists  of 
from  25,000  to  100,000  names,  profess  to  try  out  a. letter  with  a  list 
of  300  to  500  names.  A  list  of  this  size  is  not  sufficient  to  give  an 
actual  test  of  the  pulling  power  of  any  letter.  Some  of  the  most 
successful  letter  salesmen  give  it  from  their  ex-perience  that  the  very 
smallest  list  from  which  a  safe  test  can  be  made  is  1 ,000  names. 

Keying  Form  Letters.  It  is  just  as  necessary  to  krij  form  letters 
as  to  key  magazine  ads.  The  key  makes  it  possible  to  trace  results. 
The  question  of  keying  is  most  important  when  a  series  of  letters  is 
used — ^which  is  true  in  most  campaigns — for  it  then  becomes  neces- 
sary to  check  the  returns  from  each  letter  in  the  series,  ^^^len  one 
letter  only  is  sent  to  a  given  list,  the  replies  received  from  that  list 
can  be  safely  credited  to  the  letter. 

There  are  several  methods  of  keying  form  letters,  among  which 
are  the  following:  the  reader  may  be  recjuested  to  address  his  reply 
to  a  certain  department;  he  may  be  offered  a  sample  or  some  novelty; 
or  the  letter  may  be  written  in  the  first  person  singular  so  that  replies 
will  naturally  be  addressed  to  the  writer. 

The  writer  confesses  to  a  preference  for  the  last  named  method. 
The  average  mail  order  buyer  likes  to  feel  that  he  is  receiving  per- 
sonal attention — that  (here  is  someone  in  (he  house  (o  whom  he  can 
write,  instead  of  addressing  (he  house.  A  personal  touch  can  be  put 
into  the  letter  signed  by  an  individual  that  is  impossible  in  a  letter 
signed  in  the  name  of  the  house. 

163 


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164 


ADVERTISING  AND  SALES  39 

There  are  those  who  contend  that  only  the  name  of  the  house 
should  be  used,  that  the  name  of  an  individual  should  never  be  signed 
to  a  letter,  and  who  have  printed  on  their  letter  heads  the  phrase ; 
"Address  all  communications  to  the  company,  not  to  individuals." 

AMiile  it  is  perfectly  proper  to  use  every  legitimate  means  to 
keep  the  name  of  the  house  before  the  public,  there  is  a  good  deal  of 
senseless  fear  that  the  prestige  of  the  house  will  be  usurped  by  the 
individual.  In  some  quarters  this  fear  has  resulted  in  the  adoption 
of  ridiculously  extreme  rules  and  regulations.  One  incident  in  the 
personal  experience  of  the  writer  will  serve  to  illustrate  the  point. 
Having  occasion  to  request  a  favor  from  a  certain  manufacturer — a 
favor  which  would  be  granted,  if  at  all,  by  the  advertising  manager — 
and  knowing  the  advertising  manager  personally,  he  addressed  the 
request  to  him,  using  his  title  in  connection  with  the  name  of  the  firm. 
Somewhat  surprising  was  the  following  letter,  received  a  few  days 
later : 

Dear  Sir: 

We  have  your  favor  of  the  12th,  ad- 
dressed to  our  Mr. ,  and  your 

request    will  receive  the  attention  of  the 
proper  individual. 

Our  method  of  handling  correspond- 
ence is  such  that,  to  insure  proper  atten- 
tion, all  communications  should  be  ad- 
dressed to  the  company.  We  request 
that  you  observe  this  rule  in  the  future. 
Yours  truly, 

No  more  reason  for  the  fear  that  the  house  will  be  injured  by 
the  personality  of  one  of  its  correspondents  can  be  seen,  than  that 
the  personality  of  the  salesman  will  have  greater  weight  with  cus- 
tomers than  the  reputation  of  the  house.  If  the  personality  of  an 
employe — be  he  a  personal  salesman  or  a  correspondent — is  worth 
anything  in  a  business  way,  the  benefit  accrues  to  the  house  that  em- 
ploys him. 

There  is  one  other  objection  to  the  use  of  the  name  of  the  writer 
of  the  letter,  and  it  comes  from  the  United  States  Statute  making  it 
a  criminal  offense  to  open  mail  addressed  to  another.  But  this 
objection  can  be  easily  overcome;  any  emj)loye  whose  name  Is  used 
will  sign  an  order  authorizing  the  opening  of  letters  addressed  in  his 
name,  unless  marked  personal. 

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166 


ADVERTISING  AND  SALES  41 

Form  Letter  Records.  A  copy  of  each  form  letter  written  should 
be  kept  permanently.  The  copies  should  be  filed  ni  a  manner  that 
will  make  it  easy  to  refer  to  them.  For  this  purpose  an  arch  file  or 
binder  is  most  satisfactory.  The  letters  themselves  may  be  punched 
for  the  file,  or  the  loose-leaf  scrapbook  idea  can  be  adopted,  pasting 
several  letters  on  one  leaf. 

Each  letter  should  be  given  a  number  for  the  purpose  of  identifica- 
tion, whether  or  not  it  appears  on  the  letter  itself.  The  copies  should 
be  arranged  in  the  file  in  numerical  order,  but  where  there  are  several 
departments  or  divisions  using  form  letters,  they  should  be  divided 
by  departmental  indexes. 

It  is  also  well  to  keep  a  second  copy  of  the  letter  with  a  sample 
of  the  enclosures,  as  the  enclosures  may  have  an  important  bearing 
on  the  results.  These  copies  may  be  preserved  in  the  manner  sug- 
gested for  filing  copies  of  ads  and  printed  matter. 

WTien  a  form  letter  is  written,  a  record  form,  as  shown  in  Fig.  21, 
should  be  started.  This  may  be  on  a  card  or  loose  leaf;  the  latter  is 
preferred  on  account  of  the  larger  space  for  the  record.  The  head- 
ing shows  the  No.  of  the  letter,  the  subject,  name  of  the  writer,  its 
No.  in  the  series  to  which  it  belongs — first,  second,  or  third — the 
enclosures,  and  the  names  of  any  special  lists  used.  The  body  of  the 
form  provides  for  a  record  of  letters  mailed  during  the  year,  with  a 
monthly  record  of  total  costs. 

The  sheets  are  arranged  in  the  order  of  letter  Nos.,  in  a  card  file 
or  a  loose-leaf  binder. 

The  reverse  of  this  record  form  is  ruled,  as  shown  in  Fig. 
22,  to  provide  a  record  of  sales  resulting  from  the  use  of  the  letter. 
Sales  can  be  entered  daily  or  weekly,  but  the  daily  record  is  recom- 
mended. 

The  methods  of  obtaining  the  details  for  these  records  is  described 
later. 

FolIow=up  Systems.  A  necessary  and  very  important  factor  in 
the  success  of  a  business  transacted  through  the  mails,  is  the  follow- 
up  system.  And  in  a  business  in  which  sales  are  made  by  personal 
salesmen,  the  follow-up  is  used  for  certain  purposes,  and  is  as  impor- 
tant as  though  used  to  secure  orders. 

To  follow-up  is  to  keep  after,  to  keep  in  touch  with,  and  to  keep 
a  certain  subject  before  certain  individuals.     Whether  used  to  secure 

167 


42 


ADVERTISING  AND  SALES 


orders  or  make  collections,  the  idea  of  the  follow-up  is  the  same, 
though  it  is  better  known  as  a  system  for  promoting  sales. 

The  follow-up  arises  from  the  same  necessity  that  compels  the 
personal  salesman  to  call  on  a  prospective  customer  more  than  once 
— often  many  times — before  the  first  order  is  secured,  and  continue 
to  call  to  hold  his  trade.  The  follow-up  simply  makes  use  of  letters 
and  other  literature  to  take  the  place  of  the  personal  salesman. 

INIechanically,  the  follow-up  system  is  a  system  or  method  that 
insures  the  sending  of  the  right  literature  at  the  right  time.     Letters — 


Fig.  23.     Vertical  File  Drawer  Equipped  as  a  Tickler 

both  form  and  special — catalogs,  booklets,  folders,  circulars,  and 
mailing  cards  are  all  used  in  the  process  of  following  up  the  pro- 
spective purchaser ;  the  automatic  method  of  showing  when  each  piece 
of  literature  in  the  series  should  be  sent,  is  the  follow-up  system 
itself. 

Tickler  Method.  The  simplest  method  of  handling  the  follow- 
up  system  is  to  use  a  tickler  in  w^hich  to  file  memoranda  or  corre- 
spondence by  dates.  A  tickler  consists  of  a  file  equipped  with  a  se^ 
of  indexes  numbered  from  1  to  31  to  represent  the  days  of  the  month. 


168 


ADVERTISING  AND  SALES  43 

and  12  indexes  printed  with  the  name  of  the  month.  The  monthly 
indexes  are  arranged  in  order,  and  the  daily  indexes  are  placed  in 
front  of  the  monthly  Indexes  in  numerical  sequence.  The  file  may 
be  a  vertical  correspondence  file,  a  card  tray,  or  a  flat  desk  file. 

In  using  the  tickler  for  a  correspondence  follow-up,  letters  are 
filed  back  of  the  index  representing  the  day  on  which  the  subject  is 
to  receive  attention.  Each  day  the  letters  filed  behind  that  day's 
index  are  removed,  and  after  receiving  attention,  are  filed  ahead  to 
the.  next  follow-up  date. 

If  it  is  desired  to  have  a  letter  come  up  for  attention  in  another 
than  the  current  month,  the  day  of  the  month  is  noted  on  the  letter, 
and  it  is  placed  back  of  the  monthly  index.  On  the  first  of  the  month, 
the  index  for  the  previous  month  is  placed  at  the  back  of  the  file, 
which  brings  the  current  month's  index  to  the  front.  All  papers 
that  have  been  filed  back  of  the  monthly  index  are  then  distributed 
by  dates.  A  correspondence  file  drawer,  equipped  as  a  tickler,  is 
shown  in  Fig.  23. 

For  a  small  amount  of  correspondence,  the  use  of  the  tickler  is 
very  satisfactory,  and  it  is  also  used  to  excellent  advantage  for  keeping 
track  of  the  many  matters  that  require  attention  at  a  future  date. 
A  tickler  should  be  included  in  the  equipment  of  every  office,  no 
matter  what  the  line  of  business. 

Card  Follow-up.  For  most  extensive  follow-up  systems,  the 
card  index  is  used,  for  the  reason  that  a  card  is  easy  to  handle,  occupies 
but  little  space,  and  can  be  adapted  to  any  classification  desired.  A 
card  is  used  for  each  prospective  customer,  or  name  on  the  list  to  be 
followed  up,  and  should  bear  the  name  and  address  and  a  brief  his- 
tory of  the  efforts  made  to  secure  an  order,  or  accomplish  the  object 
of  the  follow-up. 

In  operating  a  follow-up  system — especially  if  the  object  is  to 
sell  goods — the  correspondent  should  have  before  him  a  history  of 
the  efforts  previously  made  to  secure  an  order.  He  should  know 
what  letters  and  other  literature  have  been  mailed  just  as  the  personal 
salesman  knows  what  arguments  he  has  used.  When  form  letters 
have  l)een  used  it  is  not  ueccssMry  to  have  ('()j)ies  of  the  letters  in  each 
case,  but  thty  should  be  identified  by  their  numbers,  or  otherwise. 
Records  of  these  letters,  by  date  and  number,  can  be  made  on  a  card, 
so  that  the  card  itself  will  give  the  correspondent  a  complete  history 

169 


44 


ADVERTISING  AND  SALES 


of  the  case.  The  correspondence — letters  from  the  prospective  cus- 
tomer and  copies  of  special  letters  to  him — can  then  be  filed  in  the 
ret^ular  wav,  and  is  accessible  at  all  times. 

The  oldest  method  of  operating  the  card  follow-up  is  to  use  the 
tickler  index  in  a  card  file.  The  follow-up  is  operated  in  exactly  the 
same  manner  as  described  for  the  correspondence  file  tickler,  except 
that  the  cards  are  filed  ahead  instead  of  the  original  correspondence. 

A  typical  follow-up  card  is  shown  in  Fig.  24.  At  the  head  of  the 
card  is  the  name  and  address  of  the  prospective  customer,  followed 
by  the  credit  rating,  the  business,  and  the  source  from  which  the  name 


Name.                                                                                       Rating 

Address 

Busineza                                                                                   Source 

Form    Letter^    end    Literature 

Special    Letters                  \ 

No 

Date 

File 

No. 

Date 

File 

Date 

File 

Date 

FilQ. 

Fig.  24.     Card  Used  for  Follow-up 

was  obtained — whether  from  advertising,  a  special  list,  or  from  a 
traveling  salesman.  The  body  of  the  card  is  ruled  for  a  record  of 
letters  mailed,  form  and  special  letters  separated.  When  a  letter  is 
sent  the  No.  and  date — if  a  form  letter — is  entered,  and  in  the  file 
column  is  noted  the  number  of  days  the  card  is  to  be  filed  ahead — 
as  10  days  or  30  days.  If  at  the  time  specified,  the  next  form  letter 
in  the  series  is  to  be  sent,  provided  no  response  has  been  received, 
the  No.  should  be  noted  on  the  next  blank  line  in  the  No.  column, 
so  that  the  letter  can  be  sent  by  a  clerk,  without  consulting  the  sales- 
man. 

When  the  cards  come  from  the  file,  those  on  which  no  form  letter 
is  indicated  for  the  next  follow-up  should  be  referred  to  the  correspond- 


170 


ADVERTISING  AND  SALES 


45 


ent.  If  he  considers  a  special  letter  advisable,  he  should  have  all 
previous  correspondence  attached  to  the  card,  that  he  may  know  just 
what  has  been  done  to  land  the  customer. 

Cross=Indexing  the  Chronological  File.  One  of  the  disadvantages 
of  the  tickler  or  chronological  index,  described  above,  for  a  follow-up 
is  the  difficulty  of  locating  a  card,  when  the  date  under  which  it  is 
filed  is  unknown.  A  letter  may  be  written  on  June  10,  and  the  card 
filed  ahead  to  June  25;  on  June  16  a  reply  may  be  received  which 
makes  it  necessary  to  find  the  follow-up  card,  but  to  do  this  it  is 
necessary  to  look  through  all  of  the  cards  filed  between  June  16  and 


Town                                                                                             State. 

Firm                                                                                                     Buyer 

Street  Address                                                                         Business 

Fig.  25.     Follow-up  Card  with  Alphabetical  Tal) 

June  25.  If  the  card  is  not  found,  the  chances  are  that  on  the  25th 
a  regular  follow-up  form  letter,  which  will  make  the  system  appear 
ridiculous,  will  be  sent. 

To  so  file  the  cards  that  any  one  can  be  found  by  name,  without 
interference  with  the  automatic  features  of  the  follow-up  system, 
is  an  important  consideration.  This  can  be  accomj)lislie(l  by  the 
use  of  a  card  like  the  one  shown  in  Fig.  25.  It  will  be  noted  that  this 
card  bears  a  small  tab  or  j)roj('('lion,  on  wliicli  is  j)riiif<'d  Ihc  letter  B. 
The.se  tabs  are  cut  g^.  <>f  die  widlli  of  (lie  ("inl  aixl  ;ir<'  in  (wcniy 
po.sitions  acro.ss  the  card.  Tliis  allows  for  twciily  siibdix  i.sions  of 
the  alphabet,  the  A  tab  being  in  the  first  position,  H  in  (lie  .second,  etc. 


17) 


46 


ADVERTISING  AND  SALES 


In  filling  in  a  card,  one  bearing  the  letter  corresponding  with 
the  first  letter  in  the  name  of  the  correspondent  is  selected — a  B  card 
for  Brown,  an  5  card  for  Smith.  Now  since  B  is  always  printed  on 
a  tab  in  the  second  position,  and  this  tab  is  always  the  same  distance 
from  the  end  of  the  card,  when  the  cards  are  filed,  all  B  tabs  will  be 
in  a  straight  line  from  front  to  back  of  the  drawer. 

No  matter  under  what  date  it  is  filed,  if  Brown's  card  is  wanted 
it  will  be  found  by  looking  through  the  row  of  B  tabs  in  the  second 
position  from  the  left.     Regardless  of  the  number,  all  tabs  printed 


f?TI 

5                                10                                '5                              [^                             25                            30 

Address 

Occup&t-ion                                                    Business 

Source                                                             Rating 

Letfers 

Letters 

Fig.  26.     Follow-up  Card  with  Movable  Tab  to  Show  Dates 

with  the  same  letter  are  found  in  one  row,  making  it  possible  to  file 
cards  by  date  and  cross-index  by  name. 

Cross=Indexing  the  Alphabetical  File.  i\.n  improvement  over 
the  cross-index  of  the  tickler,  described  above,  is  the  method  of  cross- 
indexing  an  alphabetical  file  in  a  manner  to  insure  a  follow-up  on  a 
specified  date.  A  card  without  tabs,  as  shown  in  Fig.  26,  is  used. 
Across  the  top  of  the  card  is  printed  a  series  of  numbers  representing 
the  days  of  the  month.  This  may  include  all  of  the  numbers,  from 
1  to  31,  or  the  month  may  be  divided  into  five  day  periods. 

In  connection  with  this  card  a  metal  tab,  which  can  be  attached 
at  will,  is  used.  One  of  these  tabs  is  placed  over  the  number  which 
represents  the  date  on  which  it  is  to  be  followed  up.  The  card  is 
then  filed,  indexed  by  name. 


172 


ADVERTISING  AND  SALES 


47 


The  numbers  being  printed  in  the  same  position  on  every 
card,  all  tabs  placed  over  the  same  number  will  be  in  a  direct  line  in 
the  file.  The  cards  to  be  removed  for  the  follow-up  on  a  certain  date 
are  those  bearing  tabs  over  the  number  representing  that  date.  On 
June  20,  for  illustration,  all  cards  with  tabs  over  No.  20  are  taken 
from  the  file.  When  letters  have  been  written,  the  tabs  are  moved 
to  the  next  follow-up  date,  and  the  cards  returned  to  the  file. 

This  method  of  cross-indexing  with  movable  tabs  permits  of 
the  filing  of  the  cards  in  any  manner  desired,  with  the  knowledge 
that  the  follow-up  date  will  be  surely  indicated.     The  tab  method  is 


l.i  3  4®6  7  a   9    10  .11  12   13.14-  15  16    17    18    19    20    21    22    "^ZA  25  26  27  28  29  30 
Ian.       Feb.      Mch.     Apr.       May.      June.     July.      Auq.      Sep.     Oct:       Moi/.      Dec. 

riame               "'           .     -    -                                                               Date 

Address          •"                                                                                      Source 

Sales 

Fig.  27.     Card  for  Combined  Duily  and  Monthly  Follow-up 

also  used  for  a  combination  of  daily  and  monthly  index.  On  the 
card  shown  in  Fig.  27,  the  names  of  the  month  are  j)rinted  imder  the 
date.  For  a  follow-up  in  a  later  month  a  colored  tab  is  used  to  rep- 
resent the  monthly  index,  while  a  l^lack  tab  represents  the  day  of 
the  month.  To  illustrate,  we  will  suppose  that  the  card  is  placed  in 
the  file  on  Oct  .5  and  the  next  follow-up  date  is  Nov.  10;  a  black  tab 
is  placed  over  No.  10,  and  a  red  tal)  over  No.  2.  'i1ic  card  will  not 
be  disturbed  on  Oct.  10,  as  the  red  tab  indicates  that  it  is  to  be  re- 
moved in  a  later  month,  but  on  Nov.  1,  the  red  tab  is  removed  from 
the  card,  and  the  black  tab  will  bring  it  to  notice  on  Nov.  10. 

Lists  of  Customers.     Every  concern  whether  it  secures  business 
through  the  mails,  by  means  of  personal  salesmen,  or  both,  should 


173 


4S 


ADVERTISING  AND  SALES 


linve  a  list  of  its  customers  properly  classified  and  arranged  for  easy 
reference.  This  should  be  something  more  than  a  list  of  names  and 
addresses;  certain  essential  facts  about  each  customer — such  as  his 
liusiness,  the  name  of  the  buyer,  the  credit  rating,  and  amount  of 
purchases — should  be  recorded. 

All  of  this  information  can  be  placed  at  the  head  of  the  ledger 
sheet,  but  it  never  should  be  necessary  for  another  department  to 
consult  the  records  of  the  accounting  department  for  information 
needed  daily.     The  information  given  by  the  customers'  list  is  of 


Pu  rchg  3<S.3 

1909 

/  910 

ISII 

19  12 

19/3 

Jen. 

Fe.b. 

Mch. 

April 

May. 

J  una. 

JulLj. 

Aaq. 

Sept: 

Oct 

No  or. 

De.c. 

Fig.  28.     Month] y  Record  of  Purchases  of  a  Customer 

most  value  to  the  sales  department  and  should  be  kept  in  that  depart- 
ment. 

For  customers*  lists,  cards  are  most  largely  used,  and  are  most 
satisfactory.  Cards  are  readily  classified,  new  names  can  be  added 
at  will,  and  old  names  are  removed  without  disturbing  the  balance  of 
the  list  or  the  general  arrangement  of  the  cards. 

The  follow-up  card  can  be  used  as  a  customer's  card,  but  should 
be  moved  from  the  follow-up  to  a  separate  file;  or  a  new  card  can  be 
made  when  a  prospect  becomes  a  customer. 

On  the  back  of  the  customer's  card  a  form  similar  to  Fig.  28 
should  be  printed.  This  is  intended  for  a  record  of  the  purchases 
of  the  customer  and  provides  for  a  monthly  record,  covering  a  period 
of  five  years.     The  amount  of  purchases  is  entered  monthly  from  the 


174 


ADVERTISING  AND  SALES 


49 


ledger.  In  a  business  in  which  the  purchases  of  each  customer  are 
infrequent,  each  order  should  be  entered  with  the  date,  in  pUice  of 
the  monthly  summary. 

Classification  of  List.  The  value  of  a  list  of  customers  is  greatly 
enhanced  by  a  careful  classification  of  the  names.  Lists  of  those 
engaged  in  the  different  trades  and  professions  can  be  bought,  but 
no  list  is  so  valuable  as  one  made  up  of  the  names  of  those  who  have 
answered  your  advertisements,  or  with  whom  you  have  done  business. 

Most  houses  sell  goock  to  those  in  different  trades  or  occupations. 
A  manufacturer  may  sell  different  lines,  or  the  same  line,  to  jobbers, 


'<v 

s 

10 

15 

ao 

25 

30 

Npimo. 

D^fe 

Addrass- 

Source 

Occupation                                  Bus.                   \ 

Leffers 

Leffers 

Leffers 

Leffe-rs 

Leffers     | 

Fig.  29.     Card  File  for  a  Oassifled  Customers'  List 

retailers,  and  consumers;  a  mail  order  concern  may  sell  to  farmers, 
mechanics,  and  small  retailers;  a  retailer  may  sell  to  men  and  women. 
To  sell  each  different  line  to  a  different  class  of  people,  requires 
different  arguments — a  new  line  of  selling  talk  must  be  used  in  each 
case.  \Miile  the  personal  salesman  has  an  opportunity  to  size  up 
his  prospect,  and  make  his  argument  fit  the  individual,  the  letter 
salesman  must  fit  his  argument  to  a  class.  To  drive  home  the  right 
argument,  he  must  be  sure  of  the  class  to  which  his  prospect  belongs. 
He  cannot  hope  to  form  the  personal  acfpiaintance  of  his  prospects, 
but  must  rely  on  a  j)roper  classification 

The  classes  into  which  a  list  of  customers  and  prospects  should 
be  divided  depends  on  the  nature  of  the  business  and  the  class  of  goods 


175 


5()  AD\T.RTISIXG  AND  SALES 

sold.  It  might  be  manufacturers  in  different  lines,  the  different 
professions,  retailers  in  several  lines,  or  all  of  these  com])ined  into 
one  list. 

With  a  card  list,  any  classification  is  easily  provided.  If  the 
number  of  classes  is  small — not  exceeding  seven  or  eight — the  classes 
can  be  indicated  by  the  color  of  the  card,  a  white  card  being  used  for 
one  class,  blue  for  another,  etc. 

For  a  more  extensive  classification,  cards  with  numbered  tabs, 
as  in  Fig.  29,  are  used.  It  will  be  noted  that  there  are  twelve  of  these 
tabs,  and  that  they  are  numbered  from  left  to  right.  In  the  follow-up 
systems,  from  which  this  illustration  is  taken,  each  number  represents 
a  certain  line  of  business. 

Suppose  that  No.  1  represents  manufacturers;  if  all  manu- 
facturers on  the  list  are  to  be  circularized,  only  those  names 
recorded  on  cards  with  the  No.  1  tab  are  addressed.  Now  if  the 
business  is  one  dealing  in  specialties,  it  may  be  that  the  specialty 
to  be  sold  will  depend  on  the  position  held  by  the  prospect — a  sales 
manager  will  be  more  interested  in  a  book  on  sales  methods  than  in 
one  on  factory  methods.     To  further  classify  the  list,  colors  are  used. 

In  the  system  referred  to,  eight  colors  are  used.  Seven  of  these 
represent  occupations  of  prospective  customers,  while  the  eighth  is 
used  for  customers.  A  manager  or  executive  officer  is  represented 
by  a  blue  card,  a  sales  manager  by  a  white  card,  etc.  AVhen  a  pros- 
pect becomes  a  customer,  the  card  is  removed  from  the  follow-up 
file,  the  amount  of  the  sale  is  entered  on  the  back,  and  it  is  placed  in 
another  file  reserv^ed  for  customers.  At  the  same  time  a  red  card  is 
placed  in  the  follow-up  file  for  use  in  further  circularizing.  The  tab 
on  the  customer's  card  shows  his  business,  but  the  occupation  is  not 
so  important  since  he  is  already  acquainted  with  the  house  and  its 
goods.  A  more  familiar  tone  can  be  adopted  in  letters  to  a  customer, 
than  to  a  prospect. 

A  complete  classification,  such  as  provided  in  this  system,  is  of 
immense  value  to  a  letter  salesman.  Suppose  he  wishes  to  address 
all  executives — the  blue  card  is  used;  if  he  wants  to  reach  customers 
who  are  manufacturers,  red  cards  with  No.  1  tabs  are  the  ones  used. 
He  can  make  his  letter  fit  a  particular  class  and  be  sure  of  the  class. 

Classification  of  Sales.  There  are  certain  lines  of  business  in 
which  a  second  order  for  the  same  article  is  seldom  received  from  any 

176 


ADVERTISING  AND  SALES 


51 


customer.  An  example  is  the  music  business.  The  chances  of  selHng 
a  customer  a  second  piano  are  remote,  but  the  fact  that  he  has  pur- 
chased a  piano  is  a  sure  indication  that  he  will  be  interested  in  certain 
classes  of  music.  Book  publishing  is  another  example.  A  man 
who  buys  a  book  on  advertising,  or  commercial  law,  or  auditing  is 
quite  likely  to  be  a  buyer  of  other  books  on  the  same  or  kindred 
subjects. 

In  a  business  conducted  through  the  mail,  a  classified  sales  list 
that  shows  at  a  glance  what  classes  of  goods  have  been  sold  to  each 


A                               B                               C                               D 
/iamii. 

Addm5f> 

Purchases 

C/sss  A 

C/3SS    B 

C/gss    C 

C/3SS    D 

Fig.  30.     Card  for  a  Classifled  Record  of  Purchases 

customer  furnishes  an  excellent  guide  for  further  circularizing.  On 
such  records  it  is  not  necessary  to  show  the  amounts  of  purchases — 
the  class  is  the  important  item. 

Fig.  30  shows  a  card  used  for  a  record  of  this  kind.  The  goods 
are  divided  into  four  classes,  indicated  by  the  letters  at  the  head  of 
the  columns.  When  the  first  sale  is  made,  the  name  and  address 
are  entered  on  one  of  these  cards,  and  the  date  indicated  in  the  jiroper 
column.  A  movable  tab  is  placed  on  (he  uj)per  edge  of  (l)e  card, 
over  the  letter  that  indicates  the  class,  and  the  card  is  filed.  As 
subsequent  purchases  are  made  the  dates  are  entered,  and  if  the 
purchase  includes  another  class  of  goods,  another  tab  is  placed  on  the 
card.  In  time,  one  card  may  bear  four  tabs,  indicating  that  the 
customer  has  bought  goods  in  all  four  classes. 


177 


52  ADVERTISING  AND  SALES 

AMien  new  goods  are  received,  they  can  be  brought  to  the  notice 
of  those  customers  whose  purchases  in(Hcate  that  they  are  most  Hkely 
to  be  interested,  without  disturbing  the  other  cards. 

Indexing  Customers'  Cards.  The  best  manner  of  indexing 
customers'  and  prospects'  cards  depends  on  the  size  of  the  list.  A 
Ust  of  a  few  hundred  names  is  best  indexed  alpliabetically.  A  large 
list  should  be  indexed  geographically — according  to  location. 

The  geographical  index  consists  of  index  cards  printed  with 
the  names  of  the  states,  and  sets  of  indexes  bearing  the  names  of 
the  cities  and  towns  in  the  different  states.  The  state  indexes  are 
arranged  in  alphabetical  order,  and  back  of  these  the  tow^n  indexes 
are  filed  alphabetically.  The  cards  are  filed  back  of  the  town  in- 
dexes, these  also  being  arranged  alphabetically.  Wlien  the  number 
of  names  in  a  city  is  large,  the  cards  are  further  subdivided  by  alpha- 
betical indexes.  In  states  where  the  list  is  small,  an  alphabetical 
ndex  can  be  substituted  for  the  town  index,  the  letters  representing 
towns;  names  of  customers  in  Alton  w^ould  be  filed  back  of  the  A 
index,  those  in  Springfield,  back  of  the  S  index. 

An  advantage  of  the  geographical  index  is  that  a  definite  terri- 
tory can  be  covered  by  the  letter  salesman,  or  the  personal  salesman 
can  go  over  the  list  and  find  out  the  condition  of  the  trade  in  his  own 
territory. 

PERSONAL  SALESMANSHIP  DIVISION 

Though  the  volume  of  business  secured  through  the  medium 
of  the  mails  is  increasing  at  a  rapid  rate,  the  bulk  of  the  business 
of  the  country  is  done  by  personal  salesmen. 

Leaving  out  of  the  discussion  the  question  of  retail  salesman- 
ship, the  personal  salesmanship  plan — the  employment  of  traveling 
salesmen — is  the  least  expensive  method  of  seUing  goods  at  whole- 
sale. To  sell  certain  low-priced  specialties  to  consumers,  the  mail 
order  plan  is  sometimes  best,  for  the  reason  that  it  is  necessary  to 
reach  a  large  number  of  possible  buyers  to  find  a  few  actual  buyers. 
This  can  be  done  at  less  expense  by  letters  than  by  traveling  salesmen. 

More  is  being  learned  about  how  to  use  the  mails  to  promote 
business — ^how  to  make  the  follow-up  system  an  assistant  to  the 
salesmen.  The  manufacturer  whose  goods  are  sold  to  the  trade, 
by  salesmen,  is  learning  how  to  build  up  his  own  business  by  assist- 

178 


ADVERTISING  AND  SALES  53 

«• 
ing  the  dealer  to  sell  his  goods.     He  advertises  to  interest  the  con- 
sumer, he  follows  up  the  consumer  and  the  dealer,  and  in  the  end 
assists  his  own  salesman  to  sell  more  goods. 

Much  good  literature  has  been  written  on  the  subject  of  sales- 
manship, plenty  of  advice  about  being  systematic  in  his  work  has 
been  given  the  traveling  man,  but  very  little  has  been  written  on  the 
subject  of  making  sales  records  and  reports  of  assistance  to  both 
the  house  and  the  salesman.  Some  suggestions  on  this  phase  of  the 
question  are  made  in  this  discussion. 

Routing  Salesmen.  How  to  route  his  salesmen  to  the  best  ad- 
vantage is  one  of  the  important  problems  of  the  sales  manager. 
He  must  first  decide  how  often  the  territory  should  be  covered, 
then  the  extent  of  the  territory  he  will  attempt  to  work,  and  the  num- 
ber of  men  required.  WTien  this  has  been  done,  the  territory  of  each 
man  must  be  laid  out,  and  a  route  which  will  enable  him  to  cover 
the  territory  with  the  smallest  mileage,  must  be  selected.  The 
territory  should  not  be  larger  than  a  man  can  cover  in  a  specified 
time,  but  large  enough  to  require  all  of  his  time. 

Map  and  Tack  System.  To  know  just  where  .each  man  is  at 
all  times — to  be  able  to  locate  Smith  or  Brown  instantly,  every  day — 
is  very  necessary.  Perhaps  the  best  method  of  doing  this  is  by  the 
use  of  what  is  known  as  the  map  and  tack  system. 

State  maps,  printed  in  colors,  are  fastened  in  the  bottoms  of 
shallow  drawers,  a  drawer  for  each  state.  Sharp  pointed  tacks, 
with  heads  covered  with  silk  in  a  great  variety  of  colors,  are  used 
for  various  classifications,  and  colored  silk  cords  are  used  to  indicate 
routes  and  territory  boundaries. 

To  each  salesman  is  assigned  a  specific  color,  by  which  he  is 
always  known.  Tacks  with  heads  of  the  proper  colors  are  placed 
in  the  map  at  the  towns  on  his  territory.  A  cord  is  then  strung 
from  tack  to  tack  in  the  order  in  which  he  will  cover  the  territory. 
When  the  salesman  leaves  a  town  the  cord  is  removed  from  that 
tack,  coiled  up,  and  placed  over  the  tack  at  the  next  town.  The 
tack  at  the  end  of  the  cord  always  shows  the  present  location  of  the 
salesman.  Fig.  31  illustrates  a  map  with  cords — represented  by  the 
heavy  lines — indicating  salesmen's  routes. 

Other  tacks,  with  heads  of  a  different  color  or  coiled  wire  heads 
foi  holding  labels,  are  used  to  indicate  special  facts — as,  competition 

179 


W-ro-T 


C^ 


,  "^l^f^b^M;  I.  p!©^^:^^^;_ 


"V     'eSi    •  ;.  -isjii-pay  City 


// 


l::...  .■■:^'^'-/- 


/40  ';S      .\t8-,/:    ;.       /|  / 


5^-Wift§© 


'^^••!^^ 


^^^,. 


0^    K^ 


I.;:;^'^^^ 


Fig.  31.     Map  Showing  Operation  of  Map  and  Tack  System 
Courtesy  Browne-Morse  Company 


180 


ADVERTISING  AND  SALES 


55 


strong,  customer  ready  to  buy,  claim  to  be  adjusted,  or  collections 
to  be  made.  These  are  placed  at  the  side  of  the  salesman's  tacks 
and  are  a  reminder  to  write  to  him,  about  the  special  matter,  at  that 
town.  If  an  inquiry  is  received  or  a  good  prospect  developed,  in 
some  small  town  not  regularly  visited  by  any  salesman,  a  special  tack 
is  placed  in  the  map  at  that  point.  A  cord  of  special  color  is  then 
strung  from  this  tack  to  the  nearest  stopping  point  on  any  salesman's 
route.  This  is  a  reminder  to  write  the  salesman  instructing  him  to 
make  a  special  trip  to  this  point  outside  of  his  regular  territory. 


Tmi/n                                                                                                       n^to 

My    route     for    thz     coming     u/eeA     u/i/l   be     as      follows. 

To  wn 

Hof-e/ 

Sun 

Hon. 

Tubs. 

Wed. 

Thur 

Fri. 

Sat. 

.'^^lesman              1 

Fig.  32.     Traveler's  Route  Card 

Route  Cards.  It  is  not  always  advisable  to  attempt  to  lay  out 
the  entire  route  of  a  salesman  in  advance,  neither  is  it  always  possible 
for  him  to  make  the  towns  in  the  time  calculated.  It  is  wise,  there- 
fore, to  require  the  salesman  to  keep  the  house  constantly  advised 
about  his  stopping  places.  AVhen  the  route  is  a  long  one,  a  route 
card,  as  shown  in  Fig.  32,  should  be  mailed  to  the  house  weekly. 
The  card  should  be  3X5  inches  in  size,  to  fit  (he  stanthird  size  card 
drawer.  Route  cards  of  all  salesmen,  whether  there  are  live  or  fifty, 
can  then  be  kept  in  a  card  tray  in  the  manager's  desk. 

Reports  of  Calls.  The  successful  sales  manager  of  the  modern 
type  is  learning  to  get  more  and  more  business  from  his  territory; 
he  is  not  satisfied  to  show  a  large  volume  of  business  in  a  large  terri- 
tory, unless  he  feels  that  he  has  secured  all  o!"  (he  business  possible 


181 


56 


ADVERTISING  AND  SALES 


from  every  town.  If  Baker  sells  two  dealers  in  Peoria,  well  and  good; 
but  why  did  he  fail  to  sell  the  other  five  dealers  in  the  same  line? 
And  it  is  not  in  a  fault-finding  spirit  that  he  asks  why;  if  he  knew  why, 
perhaps  he  and  the  salesman  could  together  work  out  a  plan  that 
would  solve  the  difficulty  and  secure  from  one  to  five  new  customers. 
The  salesman  knows  better  than  anyone  else  why  he  has  failed 
to  sell  certain  dealers;  he  is  the  man  who  becomes  familiar  wuth  the 
actual  conditions  in  each  town — what  competitors'  goods  are  most 
popular,  reasons  for  local  business  depression  such  as  crop  failures 


Tou/n 

Siilasm^n 

Sti^fe. 

Dafe   of  Reporl" 

riame  of  Dejklcr 

Amount" 
of  Bill 

If  Unable  fo  5ell 
5fAfe  Why 

Whose  Line 
is  he  Hiindling 

WhJit    aire- 
our   Prospccfs 

1 

a 

3 

4- 

5 

6 

7 

Rem2irks 

- 

Fig.  33.     Salesman's  Report  of  Calls  in  Each  Town 

or  labor  disturbances,  and  any  causes  for  dissatisfaction  w-ith  the  goods 
or  business  methods  of  his  own  house.  Possibly  the  sales  manager 
is  not  in  a  position  to  change  conditions,  but  certainly,  he  cannot 
solve  the  difficulties  unless  be  know^s  what  they  are.  The  salesman 
should,  therefore,  assume  that  there  is  at  least  a  chance  that  he  will 
receive  assistance  by  keeping  the  house  posted  on  every  detail  that 
might  affect  his  trade. 

The  only  way  in  which  practical  results  can  be  secured  is  for 
the  salesman  to  make  a  report  on  every  call  made,  in  every  town  on 


182 


ADVERTISING  AND  SALES  57 

his  route.  A  form  of  report  card  is  shown  in  Fig.  33.  This  is  in- 
tended for  a  brief  report  of  calls  in  one  town.  Space  is  provided  for 
reports  of  seven  calls,  but  if  there  is  a  larger  number  of  dealers, 
more  than  one  card  is  used.  On  the  back  of  the  card,  a  full  line  is 
allowed  to  each  dealer  for  remarks. 

The  salesman  is  instructed  to  mail  one  of  these  cards,  in  an 
envelope  specially  provided  for  the  purpose,  from  each  town  on  his 
route.  When  received,  the  sales  manager  examines  them,  makes 
his  notations,  and  files  them  according  to  salesmen's  routes.  AMien 
the  salesman  is  next  in  the  house  the  sales  manager  goes  over  the 
cards  with  him,  and  they  discuss  each  case  individually. 

Forms  of  report  cards  differ,  naturally,  according  to  the  busi- 
ness. In  some  lines  more  specific  information  is  needed  in  each  case 
to  enable  the  sales  manager  to  judge  intelligently  the  chances  for 
future  business.  Fig.  34  represents  a  card  used  in  one  business  for 
a  specific  report  on  each  call  made.  The  form  shown  in  Fig.  35 
provides  for  a  brief  report  including  suggestions  regarding  the  date 
of  the  next  call. 

Follow=up  of  Dealers  and  Salesmen.  In  the  modern  adver- 
tising campaigns  cf  manufacturers  in  many  lines,  an  effort  is  made 
to  secure  inquiries  from  consumers,  though  the  goods  are  sold  through 
dealers  only.  The  inquiry  is  usually  secured  by  a  promise  of  a  free 
sample,  a  handsome  catalog,  or  other  piece  of  printed  matter. 

These  inquiries  should  always  be  referred  to  the  nearest  dealer, 
and  in  answering  the  inquiry,  the  name  and  address  of  the  dealer 
should  be  given.  In  addition  to  the  inquiries  received  from  adver- 
tising, manufacturers  in  certain  lines  invite  dealers  to  send  them  the 
names  of  good  prospects.  One  of  the  large  paint  manufacturers 
asks  the  dealer  to  send  two  lists — one  of  people  who  are  talking  of 
painting  their  buildings,  one  of  people  whose  l)uildings  need  painting. 
The  manufacturer  of  a  widely  advertised  washing  machine  asks  for 
the  names  of  all  possible  buyers  to  whom  the  dealer  has  talked 
washing  machines,  without  making  a  sale. 

The  object  of  all  this  is  to  enable  (he  manufacturer  to  assist  (he 
dealer  to  sell  more  goods  of  his  manufacture.  Sometimes  the  margin 
of  profit  (o  flie  manufacturer  is  such  that  he  can  aflonl  to  maintain 
an  extensive  follow-up  on  the  names,  and  even  send  one  of  his  sales- 
men to  assist  the  dealer  to  close  the  sale. 


183 


58 


ADVERTISING  AND  SALES 


Tlie  manufacturers  of  one  of  the  popular  pianos  has  secured 
excellent  results  from  the  operation  of  such  a  system.     In  this  system, 


MUST     B£     MAILED    DAILY 


Ja/e-sman^ 


.  Dafe . 


Cdl/ed  on. 
Cify 


„  5/<?/e 


Business. 


UsualJy      buy    in Pound    Ms    from    ote<?/er  or  manf'r- 

Amounf    /iond/Q</  p<zr    ye,3r Good Medium 

Kind   of  mefa/    using 


.LOLCT— 


-Jee    mi/  order  no.. 


Wi//    need    mefs/- 


.Enc/osed 
Prospecfs- 


Fufure     cduerfisinff  /■_ 


-  Position 


Reporf    no   one    un/ess\^  Jc fiances      fo    se/f  ere    good. 
3fgfe      csrefu/iy    and  correcf/y\  I  /me  of  business    perfy  is  in. 


Fig.  34.     Specific  Report  on  Individual  Calls 


fisme 

Address 

Purchaser                                                                                      Defe 

PemarMs 

Next  caff    should  be 

Safes  man 

/iB.  salesmen      u/i//  p/e^sse    nofe     cere/u/ii/    <?//  in  formgfion    gsinecf    r&gsrding      our 
goods   in    u.ie,     or   l/)0^e     0/    oiirer    manufacfurers      on    bacfi    of  ffiis     card. 
C^r</s     ^bou/d  be    mai/ed    fo     office      regu/ar/y    ui/>zn      ouf-of-fou/nc^/fsaromsdii. 
Give    name     of  any  peop/e ,    no     inaffer      urfiaf  posifion      ffiey   fio/cf,      u/fio    baue 
been    of  assiifance       or    can    be    in    fhe  fufurz. 

Fig.  35.     Salesman's  Report  of  Call  and  Follow-up 

the  card  shown  in  Fig.  36  is  used  to  follow-up  both  the  inquirer  and 
the  dealer.  It  will  be  noted  that  columns  are  provided  for  a  record 
of  the  postage  on  every  letter  or  piece  of  printed  matter  mailed. 


184 


ADVERTISING  AND  SALES 


59 


The  prospect  receives  a  letter  once  a  montli,  while  once  in  two  months 
a  letter  is  written  to  the  dealer  asking  for  a  report. 

With  the  first  letter  to  the  prospect,  a  postal  card  acknowledg- 
ment form  is  enclosed.  On  the  postal,  space  is  provided  for  names, 
which  the  prospect  is  asked  to  fill  in  with  names  of  friends  who  might 
be  interested  in  pianos.  By  this  simple  expedient,  an  original  in- 
quiry is  often  added  to  with  a  half-dozen  new  names. 


t     Z.     3 

4-     S    6     7     8 

a  /o  II  la  13  14  IS  16  17  la  iseozi  zz  23  24 as  Z6  z? aa  Z9  3o  si 

.'itreet                                          ^n-"                                          '^t^+o 

Dealer 

1 

To    Inquirer 

To    Dealer 

Form 

^ent 

Post 

Replies 

Form 

Sent 

Post 

Replies 

Fig.  30.     Card  Used  for  Follow-up  of  Dealer  ami  Inuuirer 

With  the  first  letter  to  the  prospect,  there  is  also  enclosed  a 
formal  letter  of  introduction  to  the  dealer.  This  letter,  which  is 
addressed  to  the  dealer,  reads  as  follows : 

The  bearer  of  this  letter  wishes  to  in- 
spect our  pianos.  We  shall  esteem  it  a 
favor  if  you  will  kindly  explain  the  merits 

of  these  instruments  and  give 

an    opportunity  to  ihorouf^ldy 


examine  them. 


ResjicctfuUy, 


At  the  time  of  referring  the   iiK|uiry  to  tlie  dealer,  flic  Maiik 
shown  in  Fig.  37  is  filled  in  and  mailed  to  the  salesman  in  whose  ter- 


185 


m  ADVERTISING  AND  SALES 

ritorv  the  dealer  is  located.     The  lower  half  of  the  blank  is  for  the 
salesman's  rej)ort  to  the  house. 

Salesman's  Expense  Accounts.  Detailed  expense  accounts 
should  he  mailed  to  the  house  weekly.  A  conveniently  arranged 
form,  with  columns,  for  regular  expense  items  such  as  hotel,  R.  R. 
fare,  livery,  etc.,  will  greatly  assist  the  salesman  in  making  up  his 
accounts.     Such  a  form  is  shown  in  Fig.  38.     This  is  a  card  3"  X  5" 


ADV&RTI51N6        DEPARTMENT 

To 

We  hsue   rece/crec/   an  inquiry   from 


of. 


regard    to  our  pianoSj     and    have    referred  if"  to 


When  you  visit  this  dealer  please,  investigate  urhat  action  /le 
13  taking  to  interest  this  prospect,  and  report  to  us  on  follou/ing  ■ 
blank. 

The.  Cable    CoMPAn-y 


5ALE5MAn'S     REPORT 

On    inquiry    from 

Referred  to 


.  Salesman 


Fig.  37.     Notice  of  Inquiry  Sent  to  Salesman,  with  Blank  for  His  Report 

in  size,  punched  to  fit  a  small  ring  binder  small  enough  to  be  carried 
in  the  pocket.  Both  sides  of  the  card  are  used,  providing  for  a  record 
of  expenses  covering  a  period  of  one  week. 

SALES  RECORDS 

Regardless  of  the  nature  of  the  business,  whether  sales  are  made 
through  the  mail,  by  traveling  salesmen,  or  resident  agents,  sum- 

186 


ADVERTISING  AND  SALES 


61 


raaries  of  sales  from  day  to  day,  supply  much  valuable  information 
to  the  sales  manager.  Sales  summaries  which  show  the  amount  of 
sales  each  day  and  month,  are  the  working  charts  of  the  sales  manager. 
It  should  be  remembered  that  these  statistics  are  chiefly  valuable 
for  comparative  purposes,  but  to  insure  comparisons  of  value,  the 
statistics  must  be  compiled  in  proper  form.  It  should  be  possible 
to  compare,  not  alone  total  sales,  but  the  sales  of  each  man  in  different 
periods,  the  sales  of  one  man  with  those  of  another,  the  sales  in  differ- 
ent territories,  the  sales  of  difFerent  departments,  the  sales  by  mail 
with  those  of  personal  salesmen. 


/^                         WceKly       Expense     Statement                           /~\ 
Week  Beqinninq                                 i90 

N&mc                                                                                     Pd^id                       Vo. 

Da^y 

Milezige 

Tou/ns  Visited 

Hotel 

R.R.FArc 

Liucry 

Miscl, 

Total 

5unday 

Mondaiy 

Tuesday 







Fig.  38.     Traveler's  Weekly  Statement  of  E.\ik>uscs 

Daily  Sales  Records.  The  daily  record  of  sales  should  show 
the  sales  of  each  department,  the  source  of  the  sales,  and  the  pro- 
portion of  cash  and  credit  sales.  These  should  also  be  divided  as 
to  wholesale  and  retail. 

A  convenient  form  is  shown  in  Fig.  39.  This  is  a  sheet  punched 
for  a  loose-leaf  Ijook,  and  (here  sliould  be  as  many  copies  as  there 
are  men  in  the  organization  \\h()  arc  (hrectly  interested.  Besides 
the  sales  manager,  the  general  manager,  (he  advertising  manager, 
and  the  comptroller  are  all  directly  interested.  By  using  carbon 
paper  as  many  copies  as  needed  can  be  made  at  one  writing. 


187 


o 

Dailv 

.Sales 

Rr 

PORT 

.  —  l'"^ 

Tallied  Bu    _             _ 

1 

Depart 

ment 

or 

Cl&ss 

Wholeszkia 

Retziil 

Grand 
Total 

Mail   Order 

Sziiesma^n 

Total 

Wholesale 

Tota.1 

Retail 

Customers 

Old 

Customers 

Neu/ 

Customers 

Old 

Customers 

City 

M2.il 

Order 

' — 1 

' — ' 

^ — i 

L^ 

— ■' 

^^^^ 

— ^ 

o 

" 

To1-iil5 

Fig.  39.     Daily  Tabulation  of  Sales  by  Departments 


o 

M 

ONTHI   Y 

5iALFS       Record 

9_ 

Day 

Wholesale 

Reti.ll 

Grand 
Total 

Mail    Order 

Salesman 

Totil 
Wholasala 

TotAl 
Retail 

rieof 
CostomGrs 

■  Old 
Customers 

hew 
Customers 

Old 
Customers 

City 

Mail 
Order 

1 

a 

3 

-* 

S 

6 

1 

L 

-J 

1 

1 1 

1 — 

1 — 

' 

' 1 

' 

_. 1 

■ 

1 1 

r— — -^ 

r 1 

1 — ■ — 1 

-J 

o 

26 

37 

2  8 

29 

30 

31 

Totalis 

_    _J 

u 

Fig.  40.    Mouthlj  Recapitulation  of  Daily  Sales  Reports 
188 


ADVERTISING  AND  SALES 


63 


Monthly  Sales  Records.  Fig.  40  represents  a  sales  sheet  arranged 
for  a  monthly  summary,  the  statistics  being  obtained  from  the  daily 
records.  The  monthly  summary  follows  the  same  lines  as  the  daily 
record,  except  that  sales  are  not  divided  by  departments. 

WTiere  the  business  is  divided  into  several  departments  one  of 
these  monthly  summary  sheets  can  be  used  for  each  department.    * 

These  daily  and 
monthly- summaries  pro- 
vide for  a  comparison  of 
wholesale  with  retail, 
mail  order  with  personal 
salesmen,  and  depart- 
ments. If  there  is  a  gain 
in  one  department  and  a 
loss  in  another,  or  a  fluc- 
tuation in  total  sales, 
these  summaries  point 
out  the  source,  showing 
where  greater  efforts  are 
needed  and  where  praise 
is  deserved. 

Salesmen's  Records. 
^Yhile  the  sale  summaries 
described  afford  many 
valuable  comparisons, 
they  do  not  provide  a 
classification  that  will 
indicate  the  value  of  each 

salesman.     There  should 
Fiir.  41.     Daily  and  Monthly  Record  of  a  Salesman       ,  i      i         •         ^i 

be  a  record  showuig  the 

volume  of  business  of  each  num.  The  form  siiown  in  Fig.  41  siiows 
a  card  used  for  a  daily  and  monthly  record  of  one  salesman.  The 
form  might  be  elaborated  to  show  cost  of  goods,  salary,  expenses, 
gross  and  net  profits;  but  the  tabulating  of  this  information  is 
more  properly  the  work  of  the  statistical  dej)artment. 

These  cards  should  be  filed  alphabetically  by  name  of  the  sales- 
man, and  divided  according  to  states.  They  will  then  show  the  sales 
of  each  man  and  in  each  territory. 


Nonfh 

DAILY 

RECORD 

Day 

Amouni- 

Day 

Amount 

1 

16 

z 

1  7 

5 

1  8 

-1 

1  9 

5 

£0 

« 

El 

T 

2E 

8 

23 

9 

24 

iO 

25 

1  1 

26 

12 

27 

13 

28 

14 

29 

I  5 

30 

3  1 

1 

189 


64 


ADVERTISING  AND  SALES 


For  a  business  in  which  goods  are  sold  by  resident  agents,  a  card 
similar  to  the  one  shown  in  Fig.  42  should  be  used.  The  upper  half 
of  the  card  provides  for  the  recording  of  certain  essential  information, 
while  the  lower  half  is  used  to  record  sales. 


Toix/n 

Countti                                          State 

Population 

Name 

Business 

Territory 

Aqeni-  for 

Ratinq 

Disc. 

■■-^^>,-- 

RECORD  OFSALE.S 

Data 

Style 

Pnce 

Date 

Style 

Price 

Date 

Style 

Price 

• 

ZTTI 

U 

Fig.  42.    Record  of  Sales  by  an  Agent  or  Dealer 


190 


CREDITS  AND  COLLECTIONS 


THE  CREDIT  MAN 

Acknowledged  specialists  may  be  employed  in  every  branch  of 
an  enterprise,  the  shrewdest  brains  may  be  engaged  in  buying,  pro- 
ducing, and  selling,  but  the  final  conservator  of  the  business  is  the 
credit  man;  others  may  be  profit  makers,  but  he  is  the  profit  saver 
in  every  commercial  organization. 

He  is  on  guard  constantly — always  on  the  lookout  for  the  slightest 
sign  of  danger,  ever  ready  to  take  prompt  and  vigorous  action  to  avert 
disaster  to  his  house  or  to  lend  a  helping  hand  to  a  customer.  His 
duties  make  him  the  most  misunderstood  man  in  the  entire  organiza- 
tion. 

He  is  thorough,  methodical,  painstaking,  a  keen  student  of 
human  nature,  possessing  faith  in  the  inherent  honesty  of  his  fellow 
men.  The  insistent  search  for  facts  that  he  demands,  may  cause 
him  to  be  regarded  as  an  inquisitive  busybody  by  the  very  customer 
whom  he  desires  most  to  help;  as  a  carping  critic,  by  the  salesman 
of  his  own  house. 

Through  it  all  he  remains  faithful  to  his  trust,  watchful  of  the 
interests  of  his  house,  and  has  the  satisfaction  of  knowing  that  in 
spite  of  his  mistakes  but  a  remarkably  small  jjart  of  his  credits 
prove  bad — that  where  his  conservatism  has  lost  hundreds  in  trade 
it  has  prevented  the  loss  of  thousands. 

On  no  man  in  the  organization  is  there  such  tremendous  j)rcssure 
brought  to  bear  to  secure  favors;  on  no  man  do  the  consequences  of 
his  own  mistakes  come  back  so  surely.  The  credit  man  must  be 
firm,  and,  while  availing  liimself  of  every  reliable  source  of  informa- 
tion, he  must  stick  to  his  decisions,  for  he  is  expected  to  collect  from 
those  to  whom  he  has  extended  credit.  Every  other  man  has  a  loop- 
hole through  which  he  may  escape  criticism;  if  a  customer  is  lost 
because  goods  are  unsatisfactory,  it  may  be  "up  to"  the  salesman, 
the  shipping  clerk,  the  superintendent,  a  foreman,  or  even  an  ob- 


191 


2  THE  CREDIT  ORGANIZATION 

scure  mechanic.  The  credit  man  has  no  one  on  whom  he  can  place 
the  bhime;  if  a  customer  fails  to  pay,  no  reason  short  of  an  earth- 
quake will  relieve  the  credit  man  of  the  responsibility. 

So  much  for  the  credit  man.  Now  for  a  discussion  of  the  work 
he  is  expected  to  do,  the  machinery  of  his  office,  and  his  methods  of 
operation — for  the  writer  disclaims  any  intention  of  attempting  to 
teach  the  student  how  to  become  a  credit  man. 

INFORMATION  REQUIRED 

The  most  important  function  of  the  credit  man  is  the  determining 
of  the  credit  risk — the  amount  of  credit  that  can  safely  be  extended  to 
each  individual.  When  he  consents  to  the  delivery  of  goods  to  be 
paid  for  at  a  future  date,  he  is  loaning  his  firm's  money. 

Before  credit  is  granted  extreme  care  must  be  exercised  in 
determining  the  ability  of  the  purchaser  to  pay,  or  that  he  will  be 
able  to  pay  when  the  bill  is  due.  After  necessary  precautions  against 
assuming  too  great  a  risk  have  been  taken,  a  further  insurance  against 
loss  is  included  in  the  amount  added  to  cost — a  certain  per  cent  of  the 
profit  is  expected  to  offset  the  risk. 

In  determining  the  credit  risk,  different  classes  of  information 
are  necessary  in  different  lines  of  business.  While  certain  specific 
information  about  individual  applicants  for  credit  is  necessary,  the 
subject  may  be  divided  into  two  general  classes — wholesale  and  retail. 
Under  the  head  of  wholesale,  is  included  information  about  all  business 
concerns,  whether  a  single  proprietor,  a  partnership,  or  a  corporation. 
In  a  general  way  also,  the  same  information  is  required  in  respect 
to  these  concerns  by  the  banker,  the  manufacturer,  the  jobber,  and 
the  wholesaler.  Under  the  head  of  retail,  is  included  the  transactions 
of  a  retailer  with  his  customers,  who  may  be  regarded  as  individuals. 

Leading  authorities  on  the  subject  of  credit  place  the  factors 
which  determine  the  credit  risk  in  two  classes — the  man  and  the 
business.  Under  the  first  heading  is  considered  the  business  morals 
of  the  debtor  and  his  ability  in,  and  familiarity  with  the  business  in 
which  he  is  engaged.  The  second  heading — the  business — is  con- 
sidered from  the  financial  standpoint,  divided  as  to  its  assets  and 
liabilities,  and  the  profits  or  losses  made  in  its  operation. 

But  as  to  the  relative  importance  of  the  two  principal  factors — 
the  man  and  the  business — authorities  differ.      In  his  valuable  con- 

192 


THE  CREDIT  ORGANIZATION  3 

tribution  to  the  literature  of  credits,  Mr.  E.  St.  Elmo  I^ewis  takes  the 
stand  that  the  man — his  character — should  be  considered  secondary. 
To  quote  from  Mr.  Lewis'  book: 

If  goods  are  the  basis  of  all  credit,  character  of  the  owner  is  and  should 
be  an  after  consideration.  The  very  first  question  any  credit  man  should  ask, 
is,  can  he  pay? 

The  question  of  a  man's  ability  to  pay  is  becoming  of  greater  ease  of 
solution. 

The  question  of  the  intention  or  inclination  to  pay  must  always  be 
shrouded  in  the  nebuliB  of  psychological  theory. 

What  is  the  applicant  worth?  is  the  cruical  test.  Then  we  shall  test 
him  by  another.     What  sort  of  a  man  is  he? 

Do  we  buy  a  law  suit  when  we  sell  him  goods? 

How  much  must  we  add  for  moral  insurance  against  loss? 

Character  is  of  vital  importance  in  small  concerns;  of  vital  importance 
in  concerns  doing  a  large  business  on  small  capital,  and  it  becomes  of  less 
importance  as  we  progress  into  the  field  of  corporations. 

In  direct  contrast  to  this  contention  are  the  views  of  Mr.  Ernest 
Reckitt,  as  expressed  in  an  address  delivered  before  an  organization 
of  bank  clerks.  After  naming  the  factors  to  be  considered  by  the 
banker  before  extending  credit,  he  said : 

You  will  note  that  in  enumerating  these  factors  I  place  first,  and  pur- 
posely so,  "The  Man  Himself,"  and  I  believe  I  am  correct  in  stating  that 
bankers  are  now  placing  more  stress  upon  this  point  than  ever  before.  The 
man  of  good  character  and  intelligence,  who  is  full  of  energy  and  perseverance, 
will  not  find  it  difficult  to  obtain  a  reasonable  line  of  credit  with  his  bankers, 
while  the  man  who  is  deficient  in  those  qualities,  W'hatever  his  reputed  wealth 
may  be,  will  be  looked  upon  with  suspicion.  It  therefore  behooves  you  to 
become  students  of  human  character  as  well  as  students  of  banking,  if  you  are 
to  fill  the  highest  positions  within  your  reach. 

These  comments  may  be  out  of  the  range  proposed  by  this  paper,  but  I 
feel  I  cannot  leave  this  topic  without  giving  you  an  illustration  of  the  point  I 
wish  to  emphasize,  namely:  That  it  is  the  character  of  the  man,  or  men,  in  a 
business,  which  must  be  first  considered  before  the  banker  makes  a  loan. 
Some  time  ago,  in  a  certain  city,  there  was  a  large  corporation  reputed  to  be 
very  wealthy,  whose  balance-sheets  were  beautiful  to  behold.  Their  business 
Ijeing  large,  they  were  borrowers  of  some  of  the  largest  banking  institutions 
of  their  city.  Apfjarently  without'any  warning  the  corporation  was  declared 
bankrupt  and  went  into  the  hands  of  a  receiver.  Later,  investigation  showed 
that  the  balance-sheet  was  misleading;  some  people  might  have  called  it  a 
worse  name,  for  the  assets  had  been  overstated  and  tlie  lial)ilities  understated. 
I  happened  to  be  in  that  city  at  the  time  of  this  failure,  and,  meeting  a  director 
of  one  of  the  banks  with  whom  I  was  well  acfpiainted,  I  inquired  if  his  bank 
had  been  caught.  "No,"  said  he,  "they  did  try  and  open  an  account  with  us 
some  time  ago  with  the  object  of  becoming  borrowers,  but  we  turned  them 
down."     I  asked  him  what  reasons  he  and  his  colleagues  on  the  dircctorato 

193 


4  THE  CREDIT  ORGANIZATION 

had  for  such  action  at  a  time  when  this  corporation  was  supposed  to  be  so 
prosperous.  "Well,"  said  my  friend,  "some  time  ago  it  came  to  my  knowl- 
edge that  this  corporation  paid  no  water  tax  and  that  its  personal  j)roperty 
tax  was  a  mere  bagatelle  to  what  it  should  have  been,  and  I  figured  out  that 
the  officers  of  a  corporation  that  would  be  guilty  of  petty  bribery  would  not 
be  good  customers  for  our  bank." 

So  it  will  be  seen  that  a  knowledge  of  the  business  morals  of  the  men 
in  your  community  and  a  high  ideal,  on  your  part,  of  what  constitutes  good 
business  morals  is  a  most  essential  quality  in  the  make-up  of  a  banker,  and 
that  it  was  these  factors  that  enabled  the  bank  of  which  rtiy  friend  was  a 
director  to  escape  what  otherwise  would  have  been  a  bad  debt. 

Financial  Statements.  Without  attempting  to  decide  the  rela- 
tive importance  of  the  two  principal  factors,  it  can  safely  be  stated 
that  one  of  the  first  steps  to  be  taken  by  the  credit  man  is  to  secure  a 
financial  statement  from  the  applicant.  And  the  character  of  the 
statement  may  serve  as  a  guide  in  determining  the  character  of  the 
man  with  whom  he  has  to  deal. 

Most  business  men  are  willing  to  comply  with  any  reasonable 
request  relative  to  their  financial  standing,  when  applying  for  credit. 
Until  recently,  the  average  man  had  objected  to  giving  out  such 
statements,  except  to  his  bankers,  but  with  the  more  universal  de- 
mands for  such  statements  has  come  a  change,  and  now  a  statement 
of  some  sort  is  almost  always  obtainable. 

The  form  of  statements  used  by  banks  differ  somewhat  from 
that  used  by  manufacturers  and  jobbers,  and,  while  it  differs  slightly 
as  between  banks,  and  also  as  to  whether  the  borrower  is  an  individ- 
ual, a  partnership,  or  a  corporation,  in  general  the  statement  re- 
quired follows  the  lines  of  the  form  shown  in  Fig.  1.  This  statement 
is  signed,  in  the  name  of  the  firm  by  a  member,  in  the  case  of  a  part- 
nership; and  in  the  name  of  the  company  by  one  of  its  oflBcers,  in  the 
case  of  a  corporation.  A  statement  in  the  same  form  gives  all  of  the 
information  of  a  financial  nature  required  by  the  manufacturer  or 
merchant. 

Analysis  of  the  Statement.  Of  equal  importance  with  the 
statement  is  the  ability  to  read  it — to  correctly  interpret  its  real 
meaning.  This  calls  for  a  careful  analysis  of  the  several  items  of 
which  it  is  composed.  To  make  a  correct  analysis  means  that  the 
credit  man  must  have  a  general  knowledge  of  the  business  in  which 
the  one  asking  for  credit  is  engaged.  The  banker  must  know,  for 
example,  whether  the  season  is  one  in  which  more  capital  is  likely 

194 


THE  CREDIT  ORGANIZATION 


to  be  needed  in  the  trade  of  the  borrower,  or  one  in  which  he  should 
be  Hquidating  his  indebtedness. 

So  important  is  this  phase  of  the  question  that  some  of  the  larger 
banks  have  adopted  the  plan  of  assigning  requests  for  loans  in  dif- 


EC  Ik 

- 

190 

.ESO„«C« 

DolUxs           OMU 

Ma.„.,TlE, 

«^       c-ll 

Cuh  on  htoa  or  in  Bank 

For  Merch»B(JiM--Bive  name— not  doe 

Slock  of  M«Ch.=(li«  on  h.oa  »t  ..!« 

Not.,  ool  dut,  .ecurca 

For  Mcrcbuidi*e  p&At  doe 

Notf>  past  due.  aecured 

To 

Not,,  uosecutea  not  daj 

Notes  uDsecured  past  dae 

Account,  uot  due 

Account,  due  and  not  &0  day.  put  daa 

Account,  ove,  60  daj.pa.!  due 

For  Borrowed  Money— Rile  of  lot.  piid 

Store  Buildine  at  value 

t                              Dne 

Due  from  partners  or  atockhotjer. 

«                              Dne 

Other  pereoaal  property— dcKribe  It 

AaioQi^t  .ecured        S 

Cbaltel  Mortgage*    i 

Upon  what  property  given 

Real  Estate,  market  .alue.  give  name  ol  per.o.1 

Wheo  due 

holding  tiUe 

Mortgage,  on  Real  C.tate — stale  incumbrance 

on  each  piece— when  dae 

Rent  of  Store  per  yetr    1 

Annual  Sale.                    t 

Amonnt  of  past  due  note. 

Uome.tead.  at  tralue— state  in  *vb9«e  name 

Amount  o„n«  on  judgement  note. 

Are  you  .urety  on  note,  or  bood.7 

Confidential,  and  oHer  deMI  not  Included 

tn.urance— Stat,  on  what  property  placed  add 

above  References: 

oamc.  DI  companle. 

t 

• 

TOTAL  ASSETS 

TOTAL  LIABILITIES  OF  HVERY  KIND 

NtT  ASSETS 

Bu.inM. 

Nsntr...!                   1 

bxirtd  St 

P.nnrr.  in  lull          ] 

will  ftotif;  you  at  once. 

I'iK-   1.      ('il.stonicr'.s  l''iii;iiii'ial  Stiilciia'lit 


ferent  busine.s.ses  to  different  officers.  One  ni;iii  will  invcsligute 
real  estate  securities,  one,  applications  from  board  of  Inidc  houses, 
another  handles  applications  from  packing  houses,  others  look  after 


195 


6  THE  (TvKDTT  ORGAXTZATION 

(he  steel,  building,  jobbing,  and  manufacturing  enterprises.  Each 
man  is  a  specialist,  making  a  special  study  of  conditions  in  the  busi- 
ness to  which  he  is  assigned. 

In  making  an  analysis  of  a  statement,  each  item  must  be  taken 
up  separately  and  considered  with  respect  to  its  relationship  to  other 
items,  and  its  bearing  on  the  statement  as  a  whole. 

Cosh  on  Hand.  The  cash  on  hand  should  be  consistent  with 
the  needs  of  the  business,  and,  if  listed  separately,  the  cash  in  office 
should  never  be  a  large  sum.  There  is  seldom  any  good  reason  why 
cash  should  not  be  deposited  daily.  The  banker  will  find  it  necessary 
to  carefully  scrutinize  the  amount  in  bank,  particularly  if  the  borrower 
claims  to  deposit  in  no  other  bank. 

Merchandise.  This  item  is  always  a  somewhat  uncertain  quan- 
tity; often  an  estimate  pure  and  simple,  and  the  debtor  is  unlikely 
to  make  his  estimate  too  low.  In  the  absence  of  provable  figures, 
it  is  necessary  for  the  credit  man  to  apply  his  knowledge  of  the  busi- 
ness. Is  the  stock  larger  than  should  be  required?  Is  it  too  low  to 
enable  the  debtor  to  keep  pace  with  his  competitors?  Or,  if  a  manu- 
facturing business,  how  much  is  raw  material  and  how  much  finished 
goods? 

One  of  the  important  factors  in  making  an  analysis  of  this  item 
is  a  knowledge  of  the  accounting  methods  of  the  debtor.  Does  he 
keep  stock  records,  or  if  not,  is  his  stock  well  cared  for  and  stored  in 
a  manner  to  permit  of  a  reasonably  accurate  estimate?  On  the 
latter  point,  reports  of  the  observation  of  salesmen,  referred  to  later 
on,  have  an  important  bearing. 

Bills  Receivable.  On  the  statement  form  shown,  this  item  is 
divided  as  to  notes,  secured  and  unsecured,  not  due  and  past  due. 
To  state  that  the  amount  of  bills  receivable  is  so  much  is  one  thing, 
to  state  the  amount  not  due,  is  quite  another.  Any  considerable 
amount  of  unsecured  and  past  due  paper  indicates  lax  methods  in 
the  debtor's  own  credit  department. 

Accounts  Receivable.  This  item  is  divided  as  to  accounts  less 
than  GO  days  past  due  and  accounts  more  than  60  days  past  due. 
These  items  require  the  same  close  scrutiny  as  bills  receivable. 

The  two  items — bills  and  accounts  receivable — should  bear  a 
reasonably  constant  ratio  to  the  amount  of  sales.  Any  unusual 
increase  in  the  percentage  of  book  debts  to  sales  calls  for  careful 

196 


THE  CREDIT  ORGANIZATION  7 

scrutiny,  and  leads  to  one  of  three  conclusions:  that  trade  conditions 
are  bad,  that  the  credit  department  has  been  lax,  or  that  the  amount 
is  overstated. 

The  first  of  these  conclusions  is  supported  or  rejected  by  the 
credit  man's  knowledge  of  financial  conditions  in  general,  and  of  con- 
ditions in  the  particular  trade  of  the  debtor.  During  a  financial 
panic,  or  in  a  season  following  crop  failures,  it  is  to  be  expected  that 
book  debts  will  be  greater  in  amount  than  in  ordinary  times.  In 
the  event  of  the  third  conclusion,  it  is  time  for  a  careful  investigation. 
As  a  rule,  the  investigation  will  be  productive  of  best  results  if  an 
examination  of  the  books  by  a  public  accountant  is  included. 

Due  from  StockJiolders.  This  is  an  item  which  must  be  care- 
fully studied.  Who  are  the  stockholders  or  partners  who  own  the 
firm,  and  for  what?     What  is  their  financial  responsibility? 

Sometimes,  stockholders  whose  entire  fortunes  are  invested  in  a 
corporation  are  found  to  be  debtors  to  the  same  corporation  for 
borrowed  money. 

Due  for  Merchandise.  This  item  is  divided  as  to  accounts  not 
due  and  past  due.  It  should  be  carefully  compared  with  the  same 
item  in  statements  furnished  in  the  past.  An  increase  may  or  may 
not  be  due  to  natural  causes  such  as  the  requirements  of  the  trade 
during  a  particular  season. 

Due  for  Borrowed  Money.  Any  increase  in  this  item  should  be 
offset  by  an  increase  in  assets,  or  a  decrease  in  other  liabilities. 

Liability  as  Surety.  This  is  an  item  of  more  importance  than  is 
generally  accorded  to  it.  True,  the  liability  is  a  contingent  one, 
but  many  a  man  has  been  forced  into  bankruptcy  by  the  failure  of 
another,  for  w'hom  he  had  become  endorser. 

Another  item  which  should  in  the  opinion  of  tlie  writer  appear 
among  the  liabilities,  is  discounted  paper.  When  a  man  discounts  the 
paper  of  a  customer,  received  in  the  course  of  business,  he  assumes 
a  liability  for  the  amount,  if  not  paid  at  maturity.  True,  the  liability 
is  contingent,  but  a  liability  nevertheless.  The  extent  of  llic  lia- 
bility depends  on  the  prosperity  of  his  own  customers  and  the  care 
which  he  has  exercised  in  acce{)ting  their  paj)er. 

Information  for  Retailers.  The  information  available  for  tlie 
retailer  is  of  a  very  different  class.  Here,  the  factor,  the  man  himself, 
plays  a  more  important  part.     The  retailer  is  obliged  to  depend  more 

197 


8  THE  CREDIT  ORGANIZATION 

larfjely  on  his  personal  knowledge  and  the  general  reputation  of  his 
customer. 

Tile  city  retailer,  for  instance,  needs  to  know  where  the  jnan 
works,  his  salary,  his  reputation  for  paying  others — his  landlord, 
grocer,  and  butcher  —  and  something  about  his  personal  habits  and 
general  reputation. 

How  long  has  he  been  in  his  present  position? 

Does  he  make  frequent  changes? 

Does  he  own  a  home? 

What  rent  does  he  pay? 

Any  other  wage  earner  in  the  family? 

These  are  some  of  the  questions,  the  answers  to  which  will 
assist  in  determining  the  credit  risk. 

The  country  retailer  needs  other  information  about  his  cus- 
tomers. As  a  rule,  he  can  answer  all  of  the  questions  asked  by  the 
city  retailer  in  respect  to  his  own  customers.  He  is  more  intimately 
acquainted  with  his  customers;  he  has  a  better  opportunity  to  learn 
their  characteristics  and  habits,  than  the  city  retailer.  The  country 
retailer  has  another  advantage,  in  that  a  closer  bond  of  friendship 
exists  between  him  and  his  neighbor  merchants.  The  interests  of 
city  merchants  are  no  less  common,  but  distances  separating  them 
make  an  interchange  of  views  more  difficult. 

About  his  country  customers — the  farmers — the  retailer  re- 
quires still  different  information.  Besides  full  information  about 
the  real  estate  owned,  and  mortgages  given,  he  needs  to  know  some- 
thing about  the  man  himself. 

Does  he  market  his  crops  early,  or  is  he  a  speculator — always 
holding  for  possible  higher  prices? 

Is  the  farm  well  kept  up? 

Are  the  implements  properly  housed,  or  left  outside  at  the 
mercy  of  the  elements? 

Does  he  keep  his  live  stock  in  good  condition,  and  how  much 
does  he  feed  for  market? 

Is  he  thrifty  or  shiftless? 

Only  by  personal  contact  can  these  things  be  learned.  The 
country  merchant  who  keeps  in  closest  touch  with  his  farmer  cus- 
tomers —  sympathizing  with  them  in  their  misfortunes  and  rejoicing 
in  their  prosperity — is  usually  the  most  successful.     As  one  country 

198 


THE  CREDIT  ORGANIZATION  9 

merchant  puts  it,  he  must  act  as  a  general  advisor,  and  help  them 
bear  their  very  aches  and  pains. 

SOURCES  OF  INFORMATION 

The  usual  sources  of  credit  information  are  the  mercantile 
agencies,  reports  from  local  correspondents,  reports  from  traveling 
salesmen,  and  merchants'  associations  or  credit  reporting  agencies. 

Mercantile  Agencies.  Of  these  sources,  perhaps  the  best  known 
and  most  widely  used  by  manufacturers  and  jobbers,  is  the  mercantile 
agency.  The  mercantile  agency  is  the  outgrowth  of  a  necessity. 
About  the  year  1840,  a  few  New  York  merchants  formed  an  associa- 
tion for  the  interchange  of  credit  information.  Later,  this  became  a 
business  conducted  by  individuals  who  charged  a  small  fee  for  written 
reports. 

The  business  has  grown  to  such  proportions  that  a  single  agency 
requires  about  200  offices,  located  in  the  principal  cities  throughout 
the  world.  In  the  territory  of  each  office,  which  is  presided  over  by 
a  manager,  correspondents  are  employed,  and  at  certain  seasons 
country  reporters  traverse  every  district,  gathering  data  to  be  for- 
warded to  the  branch  offices.  Every  court  house  in  the  United 
States  has  its  paid  correspondent,  who  promptly  reports  any  action — 
as  the  filing  of  suits,  recording  of  mortgages,  or  entering  of  judg- 
ments— that  might  affect  the  credit  risk  of  any  business  man  in  the 
country. 

Some  idea  of  the  magnitude  of  the  business,  and  the  task  of 
gathering  statistics,  can  be  gained  when  it  is  considered  that  the  books 
of  a  single  agency  contain  the  names  and  ratings  of  about  1,500,000 
persons.  About  each  of  these  individuals,  the  latest  data  collected 
by  the  reporters  is  on  file  in  the  various  branch  offices. 

Delays  in  securing  information  is  one  of  the  most  common  com- 
plaints against  the  agency  service,  but  the  service  is  probably  as 
prompt  as  can  be  expected  Suppose  a  recjuest  for  a  special  report 
is  received  this  morning.  First,  the  information  on  file  is  copied, 
and  proofread  to  guard  against  errors  This  is  sent  to  (ho  .snl)scril)cr, 
but  if  it  is  not  of  a  recent  date  he  is  advised  that  further  information 
will  be  forwarded.  Or,  there  may  be  no  data  on  file,  in  which  event  a 
reporter  is  assigned  to  the  case.  lie  may  be  ol)liged  to  make  several 
calls  before  finding  his  man,  and  when  found,  the  man  may  be  rcluc- 

199 


10  TTTF,  (TxEDlT  OKGAXIZATION 

tiuit  about  iiiviiii;  information.  If  real  estate  is  listed,  the  real  estate 
man  must  look  uj)  tlio  title  and  mort^'age  records.  Thus,  two  or  three 
days  may  elapse  before  it  is  possible  to  furnish  the  report. 

Some  complaint  is  heard  that  reports  furnished  by  the  agencies 
are  not  sufficiently  specific — which  is  probably  true  in  many  cases — 
but  it  is  often  quite  difficult  to  obtain  information  on  which  positive 
statements  can  be  based.  On  the  whole,  the  service  of  the  agencies 
is  of  very  great  value  to  the  subscriber.  As  to  its  defects,  the  best 
way  to  overcome  them  is  for  the  wholesaler  to  establish  a  credit 
organization  of  his  own,  to  supplement  the  service  of  the  agency. 

Local  Correspondents.  If  the  matter  is  properly  handled,  much 
valuable  information  can  be  secured  from  local  correspondents.  The 
banker,  or  a  local  attorney,  is  in  a  position  to  make  confidential 
reports  on  local  merchants.  In  fact,  the  agencies  secure  much  of 
their  information  from  this  very  source. 

But,  in  establishing  local  correspondents,  the  exercise  of  good 
judgment  is  necessary.  The  local  attorney  should  not  be  expected 
to  furnish  information  without  pay,  or  to  go  into  details  that  would 
not  be  asked  of  an  agency  charging  $100.00  a  year  for  the  service. 

An  attorney  has  favored  us  with  a  blank  sent  out  by  one  whole- 
sale house,  on  which  he  is  asked  to  make  a  complete  report.  Among 
other  information  requested,  the  blank  calls  for  the  value  of  mer- 
chandise, realty,  cash,  total  worth,  liabilities,  and  numerous  references 
to  his  character,  habits,  etc.  Following  this  statement  is  the  question, 
"  if  not  paid,  can  you  collect?" 

Here  is  a  very  complete  statement,  to  compile  which  would 
require  several  hours'  research,  but  without  a  single  suggestion  that 
the  attorney  will  receive  pay.  And  then  he  is  asked  if  he  can  collect, 
after  the  house  has  exhausted  all  usual  methods. 

A  certain  other  concern,  when  opening  new  territory,  writes  to 
a  local  attorney  telling  him  they  are  entering  the  field ;  that  they  will 
require  information  from  time  to  time,  for  which  they  expect  to  pay 
a  reasonable  fee;  and  ask  if  he  is  in  a  position  to  represent  them  in  this 
capacity.  At  the  same  time  the  attorney  is  told  that  he  will  receive 
for  collection  any  accounts  on  which  such  action  may  be  necessary. 

When  a  special  report  is  desired,  the  blank  shown  in  Fig.  2  is 
sent.  The  local  correspondent  is  expected  to  give  as  full  information 
as  possible,  for  which  he  is  paid  prompdy. 

200 


THE  CREDIT  ORGANIZATION  11 

In  this  way,  excellent  results  are  secured.  There  is  some  ques- 
tion about  the  advisability  of  leaving  the  amount  of  the  fee  to  the 
correspondent.  A  better  plan  is  to  have  the  fee  to  be  paid  for  all 
ordinary  reports  decided  in  advance,  extra  compensation  to  be 
allowed  in  special  cases.  The  average  country  attorney  will  furnish  an 
intelligent  report  for  two  dollars — a  low  price  for  reliable  information. 


Dear  Sir- 

P/ease      make  ffm   fo//ou/'ing      re-porf-    prompf-fy,    snd   senij  us 

6t//  for  your    -seririces 

Yours    f-rulu,  ,,  _ 

W/i.sori   Company. 


-Firm  /^smes. 
.  Partners 


.Est  (y<3/ue  of  Mdse. Rsa/fy 

.Encumbrance    on  Rea/fy 


.  Cfiaracfer f/abifs 

.  /s  fie  good  for On Time  ^ 

.  Re  mark  s 


Sign. 


Fig.  2.     Local  Correspondents'  Report  Hlank 

Traveling  Salesmen.  Certain  information  about  the  business  and 
general  reputation  of  a  customer  can  best  be  obtaiued  through  the 
salesmen  of  the  house.  They  are  the  men  who  conic  in  direct  con- 
tact with  the  customers,  acquiring  an  intimate  knowledge  of  each. 

The  average  salesman  objects  to  making  out  lengthy  reports, 
but  if  approached  in  the  right  spirit,  will  give  the  credit  man  the 
benefit  of  his  observations.  The  salesman's  judgment  is  scarcely  to 
be  relied  upon  in  the  matter  of  the  financial  stiuiding  of  a  custonier 
— his  anxiety  to  sell  goods  makes  him  too  ()])tiinistic  bul  he  is 
probably  the  best  judge  of  the  character  and  business  ability  of  ;i  rn;in 
on  whom  he  is  calling  regularly. 

201 


12  THE  CREDIT  ORGANIZATION 

Frequently  a  spirit  of  antagonism  to  the  credit  department  exists 
among  the  salesmen.  This  condition  indicates  a  decided  lack  of 
that  cooperation  so  necessary  to  the  success  of  any  business.  The 
credit  man  who  possesses  tact  can  overcome  this  antagonism,  if  he 
will  but  drop  his  cold-blooded  attitude  and  meet  the  salesmen  on  a 
friendly  basis.  If  he  will  cultivate  their  friendship,  the  salesmen 
will  respond  with  information  of  great  value  to  him. 

Naturally  the  information  secured  from  a  salesman  differs  from 
that  received  from  other  sources.  About  the  class  of  information 
that  can  be  expected  is  provided  in  the  blank  shown  in  Fig.  3.  This 
can  be  printed  on  a  standard  size  card. 


A<^dress Det-&  _ 

/s  />i-5  du^inzss  prosperous? Grour/ng/'. 


S/-OCA   u/e//  se/ectec/  ? We//  /^ept/' 

Ouer  or  under-5rocKe(/  ? W<z//  dhplei/e.c/.''- 

Compe/enf    c/erks    ? .  /iouu   many  /  


Loc^t'ion     Good F Aff'enfit/e  fo   business  ? 

Genera/  repu fat/on? Dr/n/i  / Gamb/e  /_ 

Do   uou     consider   /lim    compo.tenr!' Prosperous i'- 

/Remarks  


Fig.  3.     Salesman's  Customer's  Report  Blank 

Retail  Credit  Reporting  Agencies.  In  many  cities,  merchants  have 
formed  associations  for  the  exchange  of  ledger  experiences.  Some  of 
these  associations  have  been  very  successful,  but  the  chief  difficulty 
has  been  in  sustaining  interest  and  in  securing  the  necessary  informa- 
tion. This  lack  of  interest  seems  to  be  general  in  mutual  associations 
— every  man  seems  afraid  that  he  will  give  more  than  he  receives, 

202 


THE  CREDIT  ORGANIZATION  13 

Out  of  the  merchants'  association  has  grown  the  retail  credit 
reporting  agency — the  exchange  of  information  being  conducted  as 
a  private  enterprise.  The  expression,  exchange  of  information,  is 
used  advisedly,  for  the  service  of  these  agencies  consists  mostly  of 
reports  giving  the  experiences  of  other  merchants.  To  quote  from  the 
prospectus  of  one  of  these  concerns : 

Our  company  does  for  the  retailer  what  Bradstreet  and  Dun  do  for  the 
wholesale  dealer.  We  arrive  at  the  result,  however,  in  a  different  way.  "NVe 
give  accurate  information  as  to  how  people  pay  their  bills,  regardless  of  their 
financial  standing. 

This  information  we  get  from  merchants  and  professional  men  by  means 
of  a  thorough  canvass  of  our  entire  territory.  We  visit  all  people  doing  busi- 
ness, whether  our  subscribers  or  not,  and  in  this  way  secure  the  names  of  all 
consumers  in  business  or  private  life. 

We  are  thus  able  to  tell  the  grocer  how  Mr.  B.  pays  his  butcher,  his  tailor, 
his  hatter,  his  doctor,  and  every  other  trade  or  profession  he  deals  with,  and 
each  of  these  in  turn  is  furnished  with  the  same  kind  of  information  from  the 
grocer;  thus  we  establish  the  exact  credit  standing  of  Mr.  B.  with  the  entire 
trade  of  the  city. 

Acting  upon  information  thus  furnished,  every  merchant  or  professional 
man  in  the  city  knows  from  the  most  reliable  and  trustworthy  source  to  whom 
he  can  safely  give  credit  and  w-hom  he  should  refuse. 

For  example,  we  here  give  a  specimen  rating  with  an  explanation  of  the 
same. 

"John  Doe,  carpenter,  187  Broad  St.,  5G  2F." 

This  rating  indicates  that  five  different  merchants  have  found  by  ex- 
perience that  John  Doe  is  a  prompt  paying  credit  customer,  and  two  other 
merchants  have  found  him  somewhat  slow,  but  regard  him  reliable  and  trust- 
worthy. 

Next  example: 

"John  A.  Doe,  lawyer.  210  North  Second  St.,  4D  3B." 

This  rating  indicates  that  four  different  merchants  have  found  him  too 
slow  in  paying  to  be  a  desirable  credit  customer,  and  three  other  merchants 
have  found  him  bad  pay  and  unworthy  of  credit  confidence. 

Other  sources  of  information,  which  come  under  the  head  of 
exchanges  of  ledger  experiences,  arc  the  credit  men's  associations. 
These  associations,  through  clearing  houses,  exchange  information 
about  their  customers,  thus  supplying  the  wholesaler  with  the  same 
class  of  information  as  described  above  for  retailers. 

One  credit  man  relates  the  following  incident,  illustrating  the 
value  of  the  association  clearing  house.  On  one  of  the  reports 
furnished  by  the  clearing  house,  he  noticed  that  another  merchant  had 
refused  credit  to  one  of  his  own  customers.  Investigation  developed 
the  fact  that  this  particular  customer's  locality  had  suffered  severely 

203 


14  THE  CREDIT  ORGANIZATION^ 

from  the  destruction  of  crops  by  a  cyclone.  Now  it  happened  that  this 
credit  man's  house  was  about  to  fill  a  large  order  from  this  very  cus- 
tomer. Tlie  shipment  was  held  up,  and  the  credit  man  promptly 
wrote  to  the  merchant  expressing  regret  that  his  community  had 
suffered  so  severely,  and  asking  if  his  house  could  be  of  any  assistance 
to  him.  In  closing  the  letter,  the  suggestion  was  made  that  since 
collections  were  likely  to  be  slow  with  the  merchant,  they  would 
allow  him  to  cut  down  his  order. 

The  letter  had  the  desired  effect.  Instead  of  turning  him  down 
the  merchant  was  made  to  feel  that  he  had  friends  in  that  house,  and 
it  is  probable  that  he  continued  to  be  one  of  their  valued  customers. 

RECORDING  CREDIT  INFORMATION 

Scattered  information  is  of  little  value.  A  credit  man  may  avail 
himself  of  all  sources  of  credit  information,  but  unless  he  has  it  filed 
and  recorded  where  he  can  put  his  hand  on  it,  he  will  fuid  it  of  little 
assistance  in  determining  credit  risks.  He  cannot  "keep  it  in  his 
head"  and  get  the  best  results. 

There  are  credit  men  who  profess  to  rely  largely  on  intuition, 
but  the  hard-headed  man — the  one  who  makes  the  fewest  mistakes — 
relies  on  his  facts  and  figures.  He  uses  judgment,  but  first  w^ants 
the  facts  marshaled  in  logical  order. 

Filing.  The  method  of  filing  best  adapted  to  the  needs  of  a 
given  concern  depends  on  the  size  of  the  business,  number  of  cus- 
tomers, method  of  collecting  information,  and  the  quantity  of  data 
kept  on  file.  In  a  small  business,  depending  almost  entirely  on  the 
ratings  of  the  mercantile  agencies,  with  an  occasional  special  report, 
no  special  filing  system  is  necessary.  The  few  reports  received  can 
be  filed  with  the  regular  correspondence.  But  in  a  well-organized 
credit  department,  handling  credit  information  about  a  large  number 
of  customers,  the  question  of  filing  is  of  importance. 

In  the  first  place,  all  reports  should  be  kept  in  one  place ;  special 
agency  reports,  reports  of  traveling  salesmen,  local  correspondents, 
and  the  credit  clearing  house,  with  financial  statements  furnished  by 
the  customer,  should  be  filed  together.  This  means  that  they  should 
be  separated  from  the  general  correspondence;  if  filed  with  the 
correspondence,  they  are  sure  to  become  scattered  when  the  files  are 
transferred. 

204 


THE  CREDIT  ORGANIZATION  15 

Without  question,  the  most  satisfactory  method  of  fiUng  is  to 
use  the  vertical  file,  with  a  folder  for  each  customer.  For  the  average 
business,  an  alphabetical  index  is  most  satisfactory,  but  for  a  very 
large  business,  with  customers  throughout  the  country,  it  is  best  to 
subdivide  the  file  by  states  and  towns,  arranging  the  folders  of  cus- 
tomers in  each  town  alphabetically. 

Credit  reports  are  not,  as  a  rule,  of  suflBcient  bulk  to  require  the 
large  files  and  folders  used  for  correspondence.    A  file  of  the  same 


HAMt  TOWN  STATE.  SHVPTO 


r\RM    MtMBE.R3 


BUS\nE.S3  \  RAT\NS  \    RE.FE.RE.NCtS 

BRADSTRE.E.T 


TERMS.  AND  DISCOUNT 


\  RATU 

\  DUN  \' 

\    HVeHtST     CI 


BUYS    ALSO  OF 


MANNER    or    PAV\N(^ 


Fig.  4.     Front  of  Credit  luformation  Folder 

style,  to  accommodate  folders  about  7X0  inches  in  size,  is  more 
compact,  and  has  been  found  very  satisfactory  for  this  purpose. 

A  plain  folder,  such  as  is  used  for  correspondence,  will  answer 
the  purpose,  or  a  special  form  may  be  substituted.  An  excellent 
example  of  the  special  folder  is  shown  in  Fig.  4.  The  special  feature 
of  this  folder  is  that  on  the  flap  whicli  folds  over  tlie  front  provision 
is  made  for  a  transcript  of  credit  information.  The  back  of  this 
folder  is  printed  as  shown  in  Fig.  5.  This  form  is  used  for  a  record 
of  purchases,  and  covers  a  period  of  seven  years. 

Card  Transcripts.  For  convenience,  it  is  l)est  to  make  a  brief 
b:anscript  of  the  credit  information.     This  transcript  should  embody 

205 


16 


THE  CREDIT  (^RrrANTZATTON 


the  essential  facts  which  naturally  influence  the  credit  risk,  and  should 
be  in  such  form  that  it  can  be  referred  to  very  readily. 

As  explained  above,  this  transcript  can  be  made  on  the  credit 
information  folder,  but  the  more  usual  plan  is  to  use  a  card.  For 
each  customer  a  card  such  as  shown  in  Fig  6  is  used.  The  special 
feature  of  this  card  is  that  both  the  capital  and  credit  ratings  are 
listed.     Such  a  card  saves  the  time  that  would  be  required  to  refer  to 


Year 

1909 

1910 

19  11 

1912 

1913 

19  14 

191  5 

Jiin. 

Feb. 

Mar. 

Apr. 

May. 

June. 

Julg. 

Aug. 

Sept 

Oct. 

Now. 

Dec. 

Remarhs 

« 

Fig.  5.     Back  of  Credit  Information  Folder 

the  agency  books,  and  affords  a  comparison  of  the  ratings  given  by  the 
agencies  on  different  dates.  Both  the  book  ratings  and  special 
reports  are  entered  on  this  card. 

A  card  which  provides  for  reports,  other  than  those  furnished 
by  the  agencies,  is  shown  in  Fig.  7.  A  line  for  the  folder  number 
will  be  noted  at  the  top,  a  numerical  system  of  filing  the  folders 
being  used.  Although  the  numerical  system  is  frequently  found, 
it  has  no  practical  advantages,  and  the  alphabetical  system  is  to  be 
preferred. 


206 


THE  CREDIT  ORGANIZATION 


17 


The  form  shown  in  Fig.  8  provides  for  more  general  information 
about  the  business — such  information  as  would  be  gathered  from  the 
reports  of  salesmen  and  local  correspondents.     It  will  be  noted,  also, 


(Name 

Cattalo9ue 

Town 

Cr  Limit-                                                State                                          Business 

Diihe 

Dun 
Cap  Rating 

Dun 
Cr  Rating 

Bond 
Guarantee 

Bradstrcat 
CapRating 

Bradstraef 
Cr.  Rating 

Bond 
Guarantee 

CustomersList  | 

Dun 

Brad. 

- 

( 

) 

\ 

/■ 



Fig.  6.     Credit  Agency  Report  Card 

that  the  financial  information  refers  more  especially  to  the  firm  mem- 
bers.   This  card  is  used  to  supplement  the  books  of  the  agencies. 


Folder  No                                                                                  Limit  of  Credit  9 

Name 

Address 

Business 

MERCANTILE       ASE.NCV     REPORT 

Date                            Dun                               Net  Worth                           Habits 

Date                          Bradsfrcel-                       Net  Wortt^                            Habits 

ItHFORMATION      FROM     OTHER     SOURCES 

Bu    Whom  Reported 

Net  Worth 

Worthy  of  Credit 

/'       ^ 

iQ^ 

1  r 

Fig.  7.     General  Croillt  Ueport  Card 

The  card  shown  in  Fig.  9  gives,  a  complete  history  of  reports 
asked  and  received,  and  of  credits  granted.    This  form  is  used  in  a 


207 


18 


Tin:  TREDn^  ORGANIZATION 


Imsiness  in  which  the  purchases  of  a  customer  are  infrequent,  and  in- 
volve considerable  sums.  The  credit  risk  is  considered  each  time 
an  order  is  received. 

The  card  shown  in  Fig.  10  is  used  by  a  retailer.  As  is  usual  in 
retail  credits,  the  information  provided  for  in  this  form  refers  to  past 
experiences  and  the  general  reputation  of  the  customer. 


/y<g/yte 


Fuff  ngrrn-  ofoa/ners 


Aqq.  Mar.5.  /ies/£sf.  Errcumbemd  Worth    Sfandmg  Habits 


Commenced 


Succeed 


Former  business   3nd  u/hera 


Fresenf  sfock 


Resources      outside    business 


Tofai    u/orfh 


/febifs  of  pai/menf 


Cesh  or  credit  business 


Cuer  fail 


Standing    of  firm 


Bank 


Eoer   burn 


Progress     in  business 


Brancties 


From     u/fiom      do  ttieu  Jbuu 


fiou/  rrruct}  credit 


Remarks 


Fig.  8.     General  Credit  Infonnation  Card 

Like  the  folders  used  for  filing  credit  statements  and  reports, 
credit  cards  should  be  indexed  alphabetically,  subdivided  by  states 
and  towns  when  necessary.  Filed  in  this  manner,  each  card  is 
accessible,  and  can  be  referred  to  quickly.  An  advantage  of  cards 
for  this  and  many  other  purposes  is  that  obsolete  matter  is  quickly 
eliminated,  and  new  names  are  added  at  will  without  disturbing  the 
general  arrangement  of  the  records. 

BRANCH  HOUSE  CREDITS 

Many  businesses  are  conducted  through  branch  houses^  each  in 
charge  of  a  local  manager.     Customers  are  supplied  by  the  branches. 


208 


THE  CREDIT  ORGANIZATION 


19 


and  it  Is  customary  to  have  each  branch  house  collect  its  own  accounts. 
Weekly  reports  of  the  business  transacted,  including  sales,  collections, 
and  stock  on  hand,  are  made  bv  each  branch  to  the  home  oflBce. 


TiAme 

Location 

Car<r  Issuaa 

Anitof  Credit 

Reports  AsKed 

Rttcaiued 

Dataol 

Mature  o«  Report 

Credit  Granted 

pemirns 

Onler 

Contract 

Banks 

Ag'nc-s 

BanKi 

Aghc's 

AgRept 

Sood 

Fair 

Poor 

Diihe 

Amt 

Terms 

(MonlbluJ 

Fig.  9.     Card  Record  of  Reports  Received  and  Credit  Granted 

Dupli'sate  accounts,  made  up  from  these  reports,  enable  the  home 
office  to  Keep  in  as  close  touch  with  each  account  as  though  collections 
were  made  direct. 


/y&/77e 

Lodger  Pag9 

AtfiZ/'QSS 

^mployex/  <af 

Dafo 

Eii'imsf'Qd  /ncQfnQ 

Hopu^f/on  for  Paying  ' 

Pay  us  in  fho.    F&c  /■ 

L  imif-  o^Credif^  A/iou/ad 

1 

Fig.  10.     Credit  (.'anl  for  Retailor's  T'so 

Large  concerni?,  operating  many  branches,  lisivc  found  by  ex- 
perience that  it  is  l)est  to  piiss  on  all  local  applications  for  credit  at 


209 


20 


THE  CREDIT  ORGANIZATION 


the  home  oflBcc.    This  work  is  handled  by  a  division  of  the  credit 
organization,  known  as  the  hrancli  house  credit  department. 

The  forms  shown  and  the  system  described  herein  were  designed 
for  the  use  of  an  oil  company,  and  are  very  similar  to  those  used  by 
the  large  packing  companies.  When  a  dealer  wishes  to  secure  credit 
at  a  branch,  the  form  shown  in  Fig.  11  is  filled  out  in  duplicate  and 
signed  by  the  local  manager.  The  original  is  forwarded  to  the  home 
oflBce,  while  the  duplicate  is  filed  in  the  branch  ojBBce,  under  the  name 
of  the  applicant.     Folders  are  used  for  this  purpose. 


eniG/fiAL  APPLtCArtort  ron   ckedjt 


Great  W£.^rE.Rn   Oti.  Ca. 


^RA'HCM  . 


Ref/ng 


Credit  Limii' 


Terms 


Dafz  Dun  Brad. 


Dato.      y^mt 


R.O. 


Gesa  Lud'g 


FMdse.  hfiizMdse. 


Memo. 


liamo.  of  customer^ 
Bus/m  ss 


Tbu/n 

.Addrsss 


Ansu/er  each  question  /fpossii/e     Wrifrz  x  in  ^pace  if  you  do  no/-  knou/ 


/■Does  fieou/n  rea/est^te?- 
z  Witat  is  usfue  of  sfacA!'. 


JKia/  is  ifs  va/ue/'- 


zAny  morfggiz.  an  realesfiafeP- 
4- Any  cftafffe    morfsyes? 


Jn  u/Jiasa   f^rmrP 


Jn  affiose  fauori^ 


5  Amount  of  chatfTe    mortagos     ^ 

6  What'  <3'mount  u////  6a  renuimtd   ^^ 
7Whaf  IS  sfanding   in  co'rnmapjfy ? . 


..Amount  of  REMortagz/^^ 


6  Vfiff)    uxfiaf  bank  do  fhzy   fratjsacf  dusrhe^ss  ?- 
^Wfiaf  fer/trs  &ncf  ff/nrf  do  you    '^I'nno  -rf-p 


I  fjauo  ipt/os Hosted    fA/s    aarfu    &nd  mako.  &nsu/Br  /» /Ac  dasfof  mu 


Fig.  11.     Branch  OfBce  Credit  Application 

Only  the  lower  half  of  this  form  is  filled  in  at  the  branch  office. 
The  rating,  credit  limit,  and  terms  are  entered  when  a  reply  is  received 
from  the  home  office. 

^\^len  the  application  is  received  at  the  home  office,  the  files  are 
consulted  for  any  information  that  may  have  been  received  previously, 
reports  are  asked  from  the  agencies,  and  the  decision  made.  The 
decision  is  made  known  to  the  branch  house  on  the  form  shown  in 
Fig.  12. 


210 


THE  CREDIT  ORGANIZATION  21 

This  form  is  made  in  duplicate,  bodi  the  original  and  copy  being 
forwarded  to  the  branch.  The  original  is  placed  in  the  branch  house 
files,  together  with  the  application  for  credit.  Both  the  cashier  and 
the  manager  of  the  branch  sign  the  duplicate,  as  an  acknowledgment 
that  they  understand  the  terms,  and  it  is  then  forwarded  to  the  home 
oflBce. 


GRCAT        W£S,T£.Fin        Oit.     Co. 

Littlc  Roqk  AftK^ 
Rs 


Re  fenny  fo  <3pp//cafion     tor  crecfif   by  3t>ou^: 

Credit  limit     $ 

Terms 

Refmed    Oil lia-^nlino 

Lui'g.  Oil PMcfse. 

MiiC.  Mdi^ 


GREATWESTEf^n    Oi/    Co. 
Per- 


B.H.  Credit-  M(3/7<3ger 
fioted  srd  recorded Cashier 

ZiotQd . M^n^Qor 


Fig.  12.     Branch  Ofllce  CYedit  Notice 

In  the  home  office,  the  original  application  and  the  statement  of 
terms  granted,  signed  by  the  branch  manager,  are  filed  together.  A 
folder  is  used  for  each  customer,  filed  alphabetically  with  sub- 
divisons  for  states  and  towns.  Every  subsequent  report  and  memo- 
randum of  credit  information  is  filed  in  this  folder. 

When  the  report  from  a  branch  house  shows  an  account  to  be 
past  due,  an  inquiry  blank,  as  shown  in  Fig.  13,  is  sent  to  the  branch. 
This  is  in  duplicate,  the  copy  being  retained  at  the  branch  house, 
and  the  original  forwarded  to  the  home  office.  In  both  offices,  this 
report  is  eventually  filed  in  the  folder  with  other  credit  information. 

211 


22  THK  (CREDIT  ORGANIZATION 

A  noticeable  feature  of  this  system  is  that  all  blanks  are  made 
in  duplicate.  This  insures  duplicate  credit  files  in  the  home  office 
and  branches  It  is,  of  course,  necessary  for  each  office  to  forward 
to  the  other  any  special  data  that  may  be  received,  from  whatever 
source. 

COLLECTIONS 

The  duties  of  the  credit  man  are  not  ended  when  he  has  passed 
on  the  credit  of  a  prospective  customer;  a  very  important  duty 
follows,  and  that  is  to  collect  the  accounts  that  he  has  placed  on  the 


QREAT       WE,STE.fiH     OIL    CO. 
Pt<t^ei  0nsamf  <?//  ouesfiom  ^fter  fu//  intreafi^^fton.  ^/ii/  return  m  f/r^f  mail. 

Ll'TTUE  RoCtt    AKtf /9_ 


Your   annthtif  report   ^our9    ff>^    ^account  c?/- 


is  p&st-  due    &rKf  if   zdme    as   not  <3/re<9cf(/    p<3/c/     urn  &.5A  you 

to  u»tfiasfj^^f&  <S^  once,     <3nd  fiX/  out  f/te  fo//ou/thp  reporf. 

Haire    you  piacfa  0  spec*s/  ef/orf-  fo  cof/ect  t/u's  <3Gcount .?. 

Whaf    resson   (foes  f.6e  c/e6tor  gt\re    for  no/ pgt/my  / 


H^UQ    t/au /fe<3r<f  s/}^  conrp/^i/j/"  .regardino  manner    ofp&^/ny?^ 

/f&s  ^ny.firm    iiroug/)/- sc^// To    co/Jec/ «n  ^ccounf?. 

/a  His  iu^'neas    r^nnH? 

/j  AA9    sfocA  Aepf  tjp^  . 


Do9S  f)9   yii/a    business       proper     ^tention.f- 


Incose   the  debtor    /s  &at(/ent.   but  can  not  pat/  nou/,   can  you   get-  a  note, 
u/it/i   good    security   or  erutorsQS^  not  to  run    more  t/j<3n  j/jr  mnnfh'.? 


.Manager 


Incase     you  can  not*   conrp/ere     t/i/s  report   //?t//ne    for  next  ma// , 
please    inform  t/ie    tioad  office  of  ttiis  fact,  and  send  report  as   soon 
as  possible. 


Fig.  13.     Branch  Office  Credit  Inquiry  Blank 

books.     He  may  assign  the  handling  of  collections  to  another,  but  the 
collection  desk  should  be  under  the  supervision  of  the  credit  man. 

The  handling  of  collections  furnishes  one  of  the  most  severe  tests 
of  the  ability  of  the  credit  man;  it  calls  for  the  exercise  of  a  certain 
tact,  not  absolutely  essential  in  any  other  work  in  business  life.  The 
successful  collector  must,  first  of  all,  be  a  good  judge  of  character; 

212 


THE  CREDIT  ORGANIZATION  23 

he  must  be  able  to  read  character,  and  govern  himself  by  what  he 
learns  of  his  customer's  peculiarities.  He  must  be  a  diplomat,  with 
the  happy  faculty  of  smoothing  out  the  rough  spots,  and  satisfying 
the  chronic  kicker.  While  using  judgment  in  granting  special 
favors  to  the  slow-pay  customer,  he  must  be  able  to  differentiate 
between  the  temporarily  embarrassed  but  able  and  hones.t  debtor, 
and  him  who  continually  makes  use  of  a  hard-luck  story  to  arouse 
sympathy  and  gain  time;  he  must  know  when  to  be  gently  firm,  and 
when  to  take  vigorous  action  to  save  his  house  from  loss. 

One  of  the  essential  accomplishments  of  a  good  collector  is  the 
ability  to  write  diplomatic  letters.  Collection  correspondence  is 
in  a  class  by  itself.  The  most  valuable  correspondent  is  said  to  be 
he  who  can  write  letters  that  sell  goods.  We  have  no  fault  to  find 
with  this  statement,  but  prefer  the  way  Mr.  Cody  puts  it — "the  ability 
to  write  letters  that  make  people  do  things."  The  collection  corre- 
spondent must  be  able  to  write  letters  that  make  people  do  things. 

In  a  wholesale  or  manufacturing  business,  or  any  business  that 
is  not  strictly  local,  practically  all  of  the  collections  are  made  by  mail, 
hence  the  subject  of  collection  correspondence  becomes  of  extreme 
importance.  The  extent  to  which  letters  are  used  Is  naturally 
governed  by  the  ideas  of  the  collector;  by  some  they  are  used  freely, 
by  others  as  special  appeals  or  duns  only.  One  very  successful 
credit  man,  who  has  handled  the  collections  in  one  of  the  largest 
mercantile  establishments  in  the  country,  gives  it  as  his  opinion  that 
a  letter  should  be  sent  with  every  request  for  payment — even  with 
the  monthly  statement. 

Except  in  unusual  cases,  specially  dictated  letters  are  not  neces- 
sary; filled-in  form  letters  answer  every  purpose — indeed  it  is  claimed 
by  many  that  carefully  prepared  form  letters,  designed  to  meet  certain 
definite  conditions,  are  superior  to  letters  dictated  in  the  ordinary 
rush  of  business.  Forms  can  be  prepared  for  different  classes  of 
customers,  and  to  meet  any  of  the  contingencies  likely  to  arise  in  the 
ordinary  business.  Form  letters  used  for  collection  purposes  should 
be  exceptionally  well  printed,  and  great  care  must  be  used  to  secure 
ribbons  that  are  an  exact  match  for  the  body  of  the  letter.  There 
is  nothing  more  calculated  to  make  an  unfavorable  impression  than 
a  letter  in  which  the  date,  name,  and  address  fail  by  several  shades 
to  match  the  body. 

213 


24  THE  CREDIT  ORGANIZATION 

The  exact  form  of  the  letters  must  be  varied  to  suit  tlie  particular 
business  in  which  they  are  to  be  used;  they  will  differ  in  manu- 
facturing, wholesale,  and  retail  lines,  in  a  mail-order  business,  or  for 
installment  accounts.  In  a  manufacturing  business,  for  instance 
a  letter  something  like  the  following  might  be  sent  with  the  monthly 
statement. 

Dear  sir: 

In  accordance  with  our  usual  custom,  we  enclose  a  statement  of 
your  account  as  it  appears  on  our  books  at  this  date.  Will  you  kindly 
compare  this  with  your  records,  and  advise  us  of  any  discrepancies. 

That  we  might  be  in  a  position  to  fiU  your  orders  promptly,  we 
have  kept  our  factory  running  on  full  time  during  the  past  few  months, 
which  has  involved  quite  a  heavy  investment  in  material.  We  will, 
therefore,  appreciate  a  check  from  you  covering  the  amount  shown 
to  be  due. 

We  will  also  appreciate  a  liberal  order,  which  we  can  fill  at  once, 
aa  our  stocks  are  imusually  complete  just  now. 
Very  truly  yours, 

Such  a  letter  leaves  a  very  much  better  taste  than  'please  remit 
stamped  on  the  statement,  and  yet  it  plainly  asks  for  a  remittance. 
There  is  something  about  the  letter  that  savors  of  the  personal  appeal, 
and  gives  the  debtor  the  feeling  that  a  special  accommodation  is 
being  asked,  which  he  should  make  an  effort  to  grant. 

If  the  first  letter  fails  to  bring  a  response,  it  should  be  followed 
up.  The  second  letter,  following  the  first  in  about  10  days,  might 
be  as  follows : 

Dear  sir: 

A  few  days  ago  we  sent  you  a  statement  of  your  account,  showing 
a  balance  of  S  ,  of  which  $  is  past  due . 

Not  having  heard  from  you,  we  assume  that  the  account  is  cor- 
rect, and  that  it  will  be  satisfactory  to  you  to  have  us  draw  on  you  on 
the  15th. 

In  the  meantime  we  will  be  very  pleased  to  fill  your  order  for 
any  of  our  goods  that  you  may  need. 

Very  truly  yours, 

A  letter  of  this  kind  rarely  fails  to  bring  a  goodly  percentage  of 
remittances.  The  mere  suggestion  of  a  draft  often  has  the  desired 
effect.  The  average  merchant  dislikes  to  have  a  draft  presented; 
he  feels  that  it  has  a  tendency  to  injure  his  credit  with  the  very  man 
whom  he  may  be  obliged  to  ask  for  an  accommodation — his  banker. 

214 


THE  CREDIT  ORGANIZATION  25 

The  polite  request  for  an  order  acts  as  a  sugar  coating  which  covers  the 
suggestion  of  a  dun,  and  leaves  the  recipient  in  a  pleasant  frame  of 
mind. 

The  second  paragraph  of  the  above  letter  does  not  contain  a 
positive  statement  that  a  draft  will  be  made,  nevertheless,  such  a 
course  is  hinted  at,  and,  unless  a  communication  of  some  kind  is 
received,  the  draft  should  invariably  be  made  on  the  date  specified. 
The  customer  should  be  taught  that  the  collector  means  just  what 
he  says;  any  other  course  indicates  a  lack  of  sincerity,  and  gives  the 
customer  the  feeling  that  these  notices  are  not  to  be  regarded  seri- 
ously. 

On  the  other  hand,  it  is  possible  to  go  to  the  opposite  extreme 
in  the  use  of  drafts.  The  writer  has  in  mind  a  business  man  who  had 
a  habit  of  sending  statements  of  all  accounts  the  first  of  the  month, 
without  a  letter,  and  following  these  with  drafts  about  a  week  later. 
Many  times  these  drafts  were  made  before  it  was  possible  for  a 
remittance  in  response  to  the  statement  to  reach  him,  which  caused 
hard  feelings,  and  the  loss  of  many  customers.  It  is  the  custom  of 
many  firms  to  pay  all  bills  on  a  certain  day  of  the  month — a  fact 
which  the  observant  collector  quickly  notes,  and  governs  himself 
accordingly  in  the  matter  of  sending  drafts. 

When  a  draft  is  returned,  a  letter  should  be  written  immediately; 
and  in  this  letter  a  little  sharper  tone  is  justifiable.  The  following  is 
a  good  sample  of  a  letter  to  be  used  at  this  point: 

Dear  sir: 

We  are  disappointed  to  find  that  you  have  allowed  our  draft  to  be 
returned  unpaid,  as  we  had  counted  on  this  amount  to  help  in  meeting 
our  current  obligations.  While  the  amount  of  your  indebtedness  ia 
not  large,  the  aggregate  of  the  many  small  accounts  makes  up  the  large 
amount  outstanding  on  our  books,  and  to  not  receive  the  amount 
when  due,  causes  us  considerable  embarrassment. 

As  you  know,  our  terms  arc  strictly  30  days  net.  Wc  must  insist 
on  receiving  prompt  payment  when  bills  are  due;  our  prices  arc  fig- 
ured on  this  basis,  and  our  arrangements  for  meeting  supply  bills 
and  pay-rolls  are  dependent  on  the  prompt  payment  of  bills  by  our 
customers. 

Your  total  indebtedncsH  to  us  is  $  ,  of  which  $  is 

several  days  past  due.  We  would  appreciate  a  remittance  of  the  en- 
tire amount,  but  must  insist  on  the  immediate  payment  of  the  amount 
past  due.  Failing  to  receive  either  a  remittance  or  your  note,  by  the 
23rd,  we  will  again  draw  on  you,  and  shall  expect  you  to  pa;^  the  draft 
when  presented. 

215 


26  THE  CREDIT  ORGANIZATION 

By  the  way,  our  Mr.  Jackson  reports  that  he  has  failed  to  secure 
an  order  from  you  on  his  last  two  trips.  Now  if  you  have  any  cause  for 
dissatisfaction,  we  would  Hke  to  have  you  tell  us,  as  we  are  more  than 
anxious  to  please  you,  and  would  certainly  appreciate  your  future 
orders. 

Very  truly  yours, 

One  point  in  this  letter,  to  which  special  attention  is  called,  is 
the  absence  of  the  word  dishonor.  Technically,  when  a  draft  is  not 
paid  it  is  dishonored,  but  the  word  has  an  ugly  sound:  the  word  wv- 
paid  is  less  harsh,  yet  conveys  the  desired  meaning.  V^Tiile  it  is 
sometimes  necessary  to  be  quite  emphatic,  nothing  is  gained  by 
adopting  a  tone  calculated  to  arouse  the  antagonism  of  the  debtor. 
The  time-honored  axiom  that  "  More  flies  can  be  caught  with  sugar 
than  with  vinegar,"  is  given  a  special  force  when  considered  in  con- 
nection with  collection  letters. 

Naturally,  these  letters  must  be  varied  to  suit  the  business,  the 
season,  and  general  trade  conditions.  They  are  not  submitted  as 
models,  to  be  used  under  all  circumstances,  but  to  impart  an  idea — 
the  idea  of  tone,  the  sugar  coating  which  is  so  essential  in  keeping  the 
recipient  in  the  right  frame  of  mind.  Politely  request,  ask  plainly 
for  what  you  want,  firmly  demand,  but  never  threaten  until  you  are 
prepared  to  carry  out  your  threat.  This  is  a  safe  rule  to  follow  in 
handling  collections. 

COLLECTION  SYSTEMS 

In  the  successful  handling  of  collections,  a  requisite  is  prompt- 
ness. There  must  be  a  system  that  will  insure  bringing  collections 
to  notice  at  the  right  time.  Without  attempting  to  lay  down  specific 
systems  for  individual  concerns,  detailed  descriptions  of  systems  that 
have  been  found  satisfactory  in  different  businesses  are  given  herein. 

Duplicate  Invoices.  The  tendency  at  the  present  time  is  to 
regard  each  invoice  as  a  separate  account,  and  to  regard  each  as  due 
at  the  end  of  the  time  specified — thirty,  sixty,  or  ninety  days.  An 
exception  is  found  in  the  accounts  of  city  customers.  A  wholesale 
merchant  may  have  customers  in  his  own  city  who  buy  in  small 
quantities,  placing  orders  nearly  every  day.  ITie  usual  rule  is  to  re- 
gard these  as  monthly  accounts,  the  account  for  one  month  being 
due  the  15th  of  the  following  month.  For  out-of-town  customers, 
however,  the  first  plan  is  found  more  satisfactory. 

216 


THE  CREDIT  ORGANIZATION 


27 


A  certain  large  manufacturer,  whose  business  is  world  wide, 
treats  each  invoice  as  a  separate  account,  and  handles  the  collections 
in  a  very  simple  manner.  All  invoices  are  made  in  duplicate,  the 
original  going  to  the  customer.  From  the  duplicate,  all  entries  are 
made  on  the  books.  If  special  terms  are  gi'anted,  these  terms  are 
stamped  on  the  back  of  the  duplicate  invoice. 


Name 

Address 

Terms                                                                                    Rating 

Date  of  Inuolce 

Amount 

Due 

Letters 

Replies 

Draiw 

Made  Draft 

Returned 

Final    DisfX)sition 

Fig.  14.     Collection  Card  for  Each  luvoice 

When  it  has  served  the  purpose  in  the  accounting  department, 
the  duplicate  invoice  is  returned  to  the  collection  desk.  Here  it  is 
filed  under  the  date  on  which  it  is  due. 

The  file  is  a  simple  arrangement  of  pigeon  holes.  A  case  con- 
taining sixty  pigeon  holes,  large  enough  to  hold  invoices  laid  flat, 
is  used.  These  pigeon  holes  are  divided  into  two  sets  of  thirty 
each,  one  above  the  other,  and  each  set  is  numbered  from  /  to  30. 
This  number  provides  for  filing  ahead  sixty  days,  which  is  the  longest 
credit  term  allowed. 

In  operating  the  filing  system,  the  two  sets  of  pigeon  holes  repre- 
sent alternate  months.     During  January,  bills  due  in  March  are 


217 


Lis 


THE  CREDTT  ORC^AXTZATION 


iiled  in  the  upper  pigeon  holes;  in  February,  bills  due  in  April  are 
lilcd  in  the  lower  case.  Each  day  the  bills  due  are  removed  from 
the  file  for  attention,  leaving  the  pigeon  hole  empty  for  filing  bills  due 
sixty  days  ahead.  On  INIarch  10th,  for  instance,  bills  are  removed  from 
the  No.  10  pigeon  hole  of  the  upper  case;  the  current  day's  bills,  due 
May  10th,  are  then  filed  in  the  same  pigeon  hole. 


Toiwn 

State 

Nam& 

Rating 

Street 

Bank 

Terms 

Date  of  Inuoice                   Amount 

Statement 

Drafl- 

Returned 

Remarks 

Fig.  15.    Card  Tickler  for  Collections 

^^^len  bills  come  out  for  attention,  they  are  referred  to  the  ac- 
counting department  to  find  if  they  have  been  paid.  For  those  not 
paid,  statements  are  prepared  and  returned  with  the  bills  to  the 
collection  desks.  The  usual  letters  are  written,  and  all  past  due 
bills  are  held  in  a  desk  tickler,  that  they  may  be  followed  up  from 
day  to  day  by  the  collection  clerk. 

This  system  can  be  operated  with  the  regular  tickler  file,  but  for 
a  large  number  of  bills  the  pigeon  holes  are  more  convenient.  A 
modification  is  necessary,  also,  when  the  bill  and  charge  system  is 
used.  In  that  case,  an  extra  copy  of  the  invoice  should  be  made 
for  the  use  of  the  collection  clerk. 


218 


THE  CREDIT  ORGANIZATION  29 

Card  Tickler.  A  very  convenient  method,  where  it  is  not  deemed 
advisable  to  use  duplicate  invoices,  is  to  fill  in  a  collection  card  for 
each  invoice. 

A  card,  printed  similarly  to  the  form  shown  in  Fig,  14,  is  filed 
under  the  date  on  which  the  account  is  due.  Each  day,  all  cards 
filed  under  that  date  are  removed  for  attention.  Tlie  first  step  is  to 
compare  the  cards  with  the  ledger  accounts.  If  the  account  has 
been  paid,  the  card  is  destroyed;  if  not,  a  statement  is  sent  and  the 
card  filed  ahead  to  the  next  follow-up  date.  All  letters  written  and  all 
steps  taken  are  noted  on  the  card,  so  that  in  the  end  it  presents  a 
complete  history  of  the  efforts  made  to  collect  the  account. 


/S\ 

tihtna 

Rahn9 

Addrass 

Terms 

D^te  of  Inuoice 

Amount 

Account    Dua 

Statcmont  Sent 

Will  Drau/ 

l^da  Draft 

Through 

Returned 

Delincj^uent    Says 

Written 

Placed  for  Collection 

Final  Disposition 

\ 

Fig.  16.     CoUectlon  Card  for  Alphaljetlcal  Cross-Indexing 

A  slightly  different  form  of  card,  which  is  u.sed  in  the  same 
manner,  is  shown  in  Fig.  15. 

Cross=Indexing.  The  same  objection  exists  in  regard  to  the  use 
of  the  tickler  card  for  collections  as  for  other  follow-up  purposes, 
which  is  the  difficulty  of  finding  the  cards.  Every  time  a  card  is 
removed  from  the  file  it  is  necessary  to  compare  it  with  the  ledger 
to  find  if  the  account  has  been  paid. 

To  overcome  the  difliculty,  a  card  with  an  alphabetical  tab  is 
used  to  good  advantage.  Sucli  a  card  is  .shown  in  Fig.  10.  It  will  be 
noted  that  this  card  bears  a  tab  printed  with  the  letter  G.     A  card 

219 


30 


THE  CREDIT  ORGANIZATION 


with  this  tab  is  used  for  every  name  that  commences  with  G,  and  as 
all  G  tabs  are  in  the  same  position  on  the  card,  they  will  be  in  direct 
line  from  front  to  back  of  the  file. 

The  cards  are  filed  by  dates,  but  each  day  all  remittances  are 
sent  to  the  collection  desk,  that  the  cards  representing  accounts  that 
have  been  paid  may  be  removed.  All  cards  may  be  found  by  name, 
by  referring  to  the  lettered  tabs,  thus  Brown's  card  will  be  found  in 
the  row  of  B  tabs. 


i'Z  3  *  5    ^    T  9  9    101)  le    19     14-    15     )6   n    18    19    ^21  ^  Z3 

name 

&«  es  £6  Zl  28  29  30  91 

Duh  Rah'nc^ 

Address 

Bradsfraefs 

City 

Sa/esmsn 

Account 

Leffers  Wriften 

A/7Su/tzrs  antt  Profrtf'ses    1 

Fig.  17.     Collection  Card  for  Cross-Indexing  by  Date 

Another  method  of  cross-indexing  the  collection  file  is  to  have 
the  numbers  from  1  to  SI,  representing  the  days  of  the  month,  printed 
across  the  top  of  the  card,  as  shown  in  Fig.  17.  To  indicate  the  due 
date  a  metal  tab  is  placed  over  the  proper  number,  a  red  tab  being 
used  for  succeeding  months  and  a  black  tab  for  the  current  month. 

The  cards  are  filed  alphabetically  by  name,  or  subdivided  by 
states  and  towms,  so  that  any  desired  card  can  be  found  instantly. 
Each  day  all  cards  having  tabs  over  that  date  are  removed  for  atten- 

220 


THE  CREDIT  ORGANIZATION 


31 


tion.     On  the  first  of  the  month  those  bearing  red  tabs  are  referred 
to,  and  if  due  in  the  current  month,  black  tabs  are  substituted. 

Monthly  Statements.  In  some  houses,  it  is  the  practice  to 
follow  up  collections  on  the  basis  of  the  monthly  statement,  instead 
of  treating  each  invoice  independently.  ^Vhen  this  is  done  the  col- 
lection record  must  include  a  s}Tnopsis  of  the  entire  account.     The 


r^/TA                     1 

rfs/na 

Address 

Sfefement  Pemfereo 

Draft 

paid 

Wrofa 

Promised 
fo  Pay 

Exfendeo 

Ma  fur- 
,ty 

Ramsrki 

Dato. 

Amount 

Int 

date 

Amount 

Dato. 

Amount 

/ 

J 

V 

I 

J 

Fig.  18.     Collection  Card  Stiowing  Synopsis  of  Entire  Account 

card  shown  in  Fig.  18  is  used  for  following  collections  on  such  ac- 
counts. This  form  shows  the  date  and  amount  of  statements,  with 
interest  added,  date  and  amount  of  drafts,  and  dates  and  amounts  of 
payments.  Other  columns  are  provided  for  a  record  of  letters, 
promises,  extensions,  etc. 

This  card  is  handled  in  exactly  the  same  manner  as  it  would  be 
if  used  for  a  single  invoice.  "WTiile  the  card  shown  is  used  in  a  tickler, 
it  would  be  improved  by  the  addition  of  the  numbers  across  the  top, 
which  would  permit  of  alphabetical  indexing. 


221 


32  THE  CREDIT  ORGANIZATION 

Local  Collections.     Collections  from  local  customers  are  usually 
made  by  collectors.  In  handling  such  collections,  a  system  that  will  en- 
able the  office  to  keep  track  of  the  work  of  each  collector  is  necessary. 
One  large  mercantile  concern  has  solved  the  problem  by  using 
the  following  system.     This  concern  has  a  large  number  of  customers 

who  make  fre- 
quent purchases. 
For  convenience, 
the  city  is  divided 
into  four  sec- 
tions, one  for 
each  week  in  the 
month.  Each 
section  is  divided 
into  five  parts, 
representing  the 
days  of  the  week 
from  Monday  to 
Friday,  inclusive. 
One  collector 
covers  the  entire 
city,  calling  on 
each  customer 
once  a  month. 

Arrangements 
are  made  with 
the  customers  in 
each  section  to 
pay  their  bills  at 
a  certain  time 
each  month — 
the  bills  of  all 
customers  in  the 

first  section  are  collectible  during  the  first  week  in  the  month. 
Each  customer  knows,  also,  on  what  day  of  the  week  he  is  to  expect 
the  collector. 

Statements  are  made  Saturday  morning  for  all  accounts  to  be 
collected  the  following  week.     These  statements  are  n^de  in  triplicate, 


M 

S  T  A  TE  M  E.  N  T^^,,^---''''^^ 

.. 

3T-A-rEMENT 

In  , 
The  AM£.f 

Chicago  III. 

M 

18 

In     AccounJ-   With              ■ 
T/^^  Amejvcan    MERcjKrmLE  Co. 

__ 

Fig.  19     Triplicate  Statement  for  Collectors 


222 


THE  CRP:DIT  organization  33 

as  shown  in  Fig,  19.  Two  copies  are  given  to  the  collector,  who 
arranges  them  in  a  file  according  to  his  daily  routes.  One  copy  is 
kept  in  the  office,  filed  by  routes. 

^Mien  the  collector  makes  his  call,  he  receipts  one  copy  of  the 
statement  and  delivers  it  to  the  customer.  The  second  copy  is  kept 
by  the  collector  and  turned  in  with  the  collection.  If  the  customer 
is  not  found,  or  if  he  fails  to  pay,  both  copies  of  the  statement  must 
be  turned  in  by  the  collector. 

Each  morning  the  collector  makes  his  report  for  the  previous 
day.  The  cashier  compares  the  collector's  report  with  his  copies 
of  the  statements,  and,  as  the  collector  must  turn  in  both  of  his  copies 
when  no  payment  has  been  made,  a  safe  check  is  had  on  the  collector. 
To  make  the  check  more  positive,  it  is  the  custom  of  the  cashier  to 
mail  a  copy  of  the  statement  to  those  customers  who  have  made  no 
payments,  or  partial  payments,  requesting  them  to  compare  with 
their  records  and  advise  if  any  discrepancies  are  found.  This  makes 
it  impossible  for  the  collector  to  hold  out  collections  without  detection. 

Collecting  from  the  Ledger.  In  many  houses  having  no  organ- 
ized credit  department,  the  collections  are  handled  by  the  bookkeeper. 
WTien  this  work  is  added  to  his  many  other  duties,  the  bookkeeper  is 
obliged  to  devise  some  scheme  that  will  eliminate  detail — he  has  no 
time  to  make  additional  records.  His  method  is  to  follow  up  col- 
lections direct  from  the  ledger. 

But  there  must  be  some  method  of  bringing  the  accounts  to  notice 
when  they  require  attention — ^an  automatic  system.  The  most 
simple  scheme  is  shown  in  Fig.  20.  Across  the  end  of  the  ledger 
sheet — which  is  loose-leaf — numbers  representing  the  days  of  the 
month  are  printed,  and  metal  markers,  or  tabs,  are  attached  over  the 
due  dates. 

To  represent  different  stages  in  Ihe  collection  of  the  accounts, 
different  colors  are  used.  When  a  charge  is  posted  to  tlie  ledger 
sheet,  a  black  tab  is  placed  over  the  date  on  which  the  bill  falls  due. 
WTben  payments  are  posted  the  tabs  are  removed,  provided  the  ac- 
count is  paid  in  full;  otherwise  it  is  moved  forvwird  to  the  next  due 
date.  After  the  day's  remittances  are  posted,  all  sheets  with  black 
tabs  over  the  current  date  are  referred  to,  and  statements  made.  At 
die  same  time,  white  tabs  are  substituted  for  the  black. 

The  next  step  is  to  make  drafts  for  all  accounts  on  which  white 

223 


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P/ease    prasen/ ,s/ o/?ce    a/7d  re/rt/f  proceeds,      or     ref'urn     u/ifh 
reasons     for"  nonp&</menf. 

fiotfUt 

Chicago              /9 

Wa  haue  f/tia  (fag  drsu//)  on  j/ou,  for  amotmf  rtamec/  be/ou/.   t/irougfi 

Panm 

nn//^rx    ^                                          _„ 

P/eos&    pay  u/Aen   prese/tfat/ 

To                                      - _ 

Thz  Hartman     Mr  a   Co. 

rrM.t 

c 

lia/6// 


Chicago 


-B/^nn  


.Do/ tars  ^ 


D 


Fig.  21.     Quadruplicate  Draft  Form  which  Includes  Letters  of  Advice  to  Bank  and 

Drawee 


225 


36  THE  CREDIT  ORGANIZATTOX 

tabs  have  appeared  ten  days,  that  is,  on  the  10th  drafts  are  made  for 
all  accounts  with  white  tabs  over  the  30th.  Blue  tabs  are  then  sub- 
stituted for  white.  If  the  draft  is  returned,  a  red  tab  is  substituted. 
The  red  tabs  indicate  accounts  past  due,  which  are  subject  to  such 
action  as  may  be  considered  advisable.  This  ledger  sheet,  with  the 
adjustable  tabs,  insures  attention  to  collections,  regardless  of  the 
method  of  filing.  --^ 

Handling  Drafts.  When  drafts  are  used  extensively,  consider- 
able detail  is  involved  in  handling  the  records.  Any  method  that 
will  reduce  this  detail  means  a  material  reduction  in  the  expense  of 
conducting  the  work  of  the  collection  desk. 

The  usual  method  is  to  write  the  draft  and  register  it  in  a  draft 
record  book.  Then  the  necessary  record  is  made  on  the  collection 
card.  A  draft  register  is  used  that  there  may  be  a  record  showing 
the  aggregate  of  drafts  outstanding,  and  the  number  and  amount  in 
the  hands  of  each  bank — where  drafts  are  sent  direct,  instead  of 
through  a  local  bank.  The  next  step  is  to  write  a  letter  of  advice  to 
the  bank.  This  method  necessitates  w  riting  the  names  of  the  bank, 
the  drawee,  and  the  amount  of  the  draft  three  times — on  the  draft, 
letter  of  advice,  and  draft  register. 

By  the  use  of  properly  designed  forms,  this  duplication  can  be 
avoided.  Fig.  21  shows  a  set  of  forms  designed  for  the  purpose.  A 
is  the  original  draft,  B  is  the  letter  of  advice  to  the  bank,  C  is  a  letter 
of  advice  to  the  drawee,  and  D  is  the  office  record.  The  draft,  A, 
is  attached  to  the  letter  of  advice,  B,  and  is  detached  by  the  bank. 
The  four  forms  are  so  printed  that  the  date,  name  of  the  bank,  amount, 
and  name  and  address  of  the  drawee  register  perfectly.  The  blanks 
are  properly  spaced  for  use  in  a  typewriter,  and  all  copies  are  made 
with  one  writing. 

Copies  A  and  B  are  mailed  to  the  bank,  and  C  to  the  drawee. 
From  copy  D  the  record  is  made  on  the  collection  card,  after  which 
it  is  filed  in  a  card  tray,  under  the  name  of  the  bank.  This  keeps 
copies  of  all  drafts  sent  to  each  bank  together,  and  the  total  of  all 
drafts  outstanding  is  quickly  obtained  on  an  adding  machine.  When 
payments  are  made,  or  drafts  are  returned,  these  copies  are  removed 
from  the  files.  Frequent  reference  to  the  file  insures  the  necessary 
follow-up  on  banks  that  are  slow  in  reporting. 

Installment  Collections.    Probably  the  most  difficult  class  of 

226 


THE  CREDIT  ORGANIZATION 


37 


accounts  to  handle  from  a  collection  standpoint  is  installment  ac- 
counts. Payments  are  quite  irregular,  both  as  to  time  and  amount,  and 
frequent  changes  of  address  make  it  difficult  to  keep  track  of  debtors. 

The  collec- 
tor of  installment 
accounts  must 
have  the  faculty 
of  meeting  and 
satisfying  all 
sorts  of  people. 
He  is  obliged  to 
listen  to  hard- 
luck  tales  with- 
out number,  and 
while  sympathiz- 
ing w  i  t  h  the 
customers,  must 
be  patiently  per- 
sistent. If  un- 
able to  collect 
the  dollar  due, 
he  will  accept  a 
h  a  1  f-dollar  t  o 
keep  the  account 
active.  So  long 
as  he  collects 
soTuething,  each 
time  a  payment 
is  due,  he  is  in 
a  position  to 
make  the  debtor 
feel  the  impor- 
tance of  the  con- 
tract, but  let  one 

or  two  collection  days  go  by  without  a  payment,  and  the  debtor  has  the 
upper  hand.  He  then  feels  that  he  can  stand-ofY  the  collector  when- 
ever he  happens  to  have  other  uses  for  his  money,  a  condition 
which  becomes  increasingly  frequent. 


Contr^t^fi'  no. 

Amntinr  A                                   \ 

n^f-p                                                         Cn/lort^inn  n^fi> 

ry^ma 

^  r/iir'? «;  <=                                                                                             1 

/fT%trf/monf 

Nr, 

M^ko.   rtf  /n.'ifnjmcni- 

PA  'r'MBnTS 

DdtQ. 

Principgf 

/rrterest 

Co//ec/o/' 

Fig.  22.    Contract  for  Installmont  Sales 


227 


38 


THE  CREDIT  ORGANIZATION 


An  installment  dealer  will  nurse  an  account  to  the  limit,  rather 
than  take  back  tlie  goods  he  has  sold.  Once  he  has  collected  the 
tost  of  the  article,  he  will  accept  payments  of  almost  any  amount, 
but  it  will  not  do  to  let  the  debtor  know  how  lenient  he  is  prepared 
to  be;  at  least  a  semblance  of  enforcing  the  contract  must  be  kept  up. 

The  most  familiar  branch  of  the  installment  business  is  the  sale 
of  house  furnishings  and  pianos.  The  sale  of  house  furnishings  on 
the  installment  plan  is  rapidly  increasing,  and  probably  more  pianos 


/rf3TALl,M£NT       REGfSTBtt 

Dste 

Cont 
No. 

fiamiz.  end  Addmss 

Tof-gf 

Pianos 

^Janola. 

Ofhe,r 
Insf-rumnnts 

Misc. 

[o 

Fig.  23.  Installment  Contract  Register 

are  sold  on  this  than  any  other  plan.  Furniture  dealers  who  formerly 
sold  only  for  cash  or  on  approved  credits,  are  finding  profitable  busi- 
ness among  the  better  class  of  installment  buyers. 

Installment  sales  are  made  on  contracts,  or  leases,  which  provide 
that  title  to  the  goods  shall  be  held  by  the  seller  until  all  payments 
have  been  made,  and  that  the  right  of  possession  shall  be  forfeited 
by  the  buyer  if  he  fails  to  make  any  payment  when  due.  WTien  the 
contract  is  folded,  the  outside  shows  a  form  printed  as  in  Fig.  22. 
This  particular  form  is  used  by  a  musical  instrument  house. 

228 


THE  CREDIT  ORGANIZATION 


39 


At  the  head  of  the  form  is  shown  the  contract  number,  amount, 
date  of  contract  and  collection  date,  name  and  address  of  the  buyer, 
and  the  name,  number,  and  make  of  instrument.  Below  is  space 
for  a  record  of  payments,  divided  as  to  principal  and  interest,  with 
the  names  of  the  collectors.  When  a  sale  is  made,  a  contract  is  made 
in  duplicate,  the  original  remaining  in  possession  of  the  seller  and  the 
duplicate  being  given  to  the  purchaser. 


'  -  -" 

rtn 

^hooi-J^n. 

I 

Amntmt   f 
Datimonf- » 

CoUecf/'<vr-  O^^' 

1 

^^      JiHftro.^^                                                                                                                                                                                     1 

^cfefre.^& 

=0 

Daf-e. 

Principa/ 

/nferesf 

Ba/ancQ 

Daf-Q. 

Principal 

/nfer&sf 

Ba/afTcz 

Fig.  24.     Ledger  for  Installment  Accounts 

Installment  Register.  All  contracts  are  registered  in  numerical 
order,  in  an  installment  register  ruled  as  shown  in  Fig.  23.  One 
line  is  used  for  each  contract,  the  particulars  recorded  being  the  date 
and  number  of  the  contract,  name  and  address  of  the  buyer,  and  the 
amounts  to  be  credited  to  the  different  sales  accounts.  It  is  not 
necessary  to  list  the  articles  sold,  as  a  complete  list  will  be  found  in 
the  contract. 

The  footings  of  the  money  columns  are  carried  forward  to  the 
end  of  the  month,  when  the  totals  are  credited  to  the  sales  accounts 


229 


40 


'IMIK  (MIKDIT  ORGANIZATION 


ill  the  general  ledger.  The  footing  of  the  ioful  column,  which  is 
the  total  of  all  installment  sales,  is  posted  to  the  debit  of  an  install' 
•ment  contract  account  in  the  general  ledger.  This  is  a  controlling 
account  of  the  installment  ledger  accounts. 

Installment  Ledger.  Installment  accounts  necessitate  a  form 
of  ledger  differing  from  that  used  for  ordinary  accounts.  The  special 
requirement  in  such  a  ledger  is  space  for  recording  a  large  number 
of  payments.  Fig.  24  shows  a  form  of  loose-leaf  ledger  sheet  designed 
for  installment  accounts. 


/nsTAU-MEnr  Cash  Receipts 

Bsfe. 

Receiued  From 

Confrgcf 

/n  sf3//m<znt    Ledger         \ 

rof3/ 

Prindpa/ 

f/j^er<zst\ 

' 

1 

Fig.  25.     Special  Cash  Receipt  Book  for  Installment  Collections 

One  of  these  ledger  sheets  is  used  for  each  installment  contract. 
The  particulars  of  the  contract  are  recorded  at  the  head  of  the  ledger 
sheet,  above  the  name  and  address.  The  particulars  recorded  are 
the  number  of  the  contract,  the  amount  and  date,  amount  of  pay- 
ments, collection  day,  and  whether  payments  are  to  be  made  weeklv 
or  monthly.  The  body  of  the  form  is  ruled  for  a  record  of  payments 
and  balances. 


230 


THE  CREDIT  ORGANIZATIOX  41 

The  ledger  sheets  are  arranged  in  alphabetical  order,  about  five- 
hundred  sheets  in  each  binder.  Each  alphabetical  section  is  separ- 
ately indexed  to  afford  quick  reference  to  all  accounts.  If  the  con- 
tract number  only  is  known,  reference  is  had  to  the  installment  regis- 
ter, where  all  contracts  are  recorded  in  numerical  order. 

Cash  Receipts.  For  installment  collections,  it  is  well  to  provide 
a  special  cash  receipt  book.  Such  a  form  is  shown  in  Fig.  25.  This 
form  is  used  exclusively  for  installment  receipts,  and  payments  are 
posted  direct  to  the  installment  ledger.  The  total  cash  for  the  day 
is  entered  as  one  item  in  the  general  cash  book. 

Statement  of  Installment  Ledger.  From  an  accounting  stand- 
point, installment  accounts  present  certain  difficulties  not  experienced 
in  the  handling  of  other  classes  of  accounts  receivable.  There  is 
always  a  question  as  to  the  real  value  of  the  accounts  outstanding, 
a  doubt  as  to  the  advisability  of  including  the  total  balances  in  a 
statement  of  assets.  A  live  account — one  on  which  payments  are 
being  made  regularly — is  legitimately  considered  as  good  an  asset  as 
any  other  account  receivable,  but  the  value  of  the  delinquent  account 
— when  payments  are  past  due — is  questionable,  and  if  included  in  a 
balance  sheet,  the  nature  of  the  asset  should  be  clearly  stated. 

That  the  actual  condition  of  these  accounts  may  be  shown  on 
the  general  ledger,  it  is  the  better  practice  to  carry  two  accounts, 
representing  live  and  delinquent  accounts.  Installment  sales  should 
be  charged  to  an  Installment  Accounts  Receivable  account,  and  pay- 
ments credited  to  the  same  account,  which  then  becomes  a  general 
ledger  controUing  account  of  the  live  accounts  in  the  installment 
ledger.  Another  account  should  be  opened  in  the  general  ledger 
under  some  such  caption  as  Installment  Accounts  Delinquent. 
When  accounts  become  delinquent,  they  should  be  transferred  by 
journal  entry  to  this  account.  The  journal  entry  would  be: 
Installment  Accounts  Delinquent 
Installment  Accounts  Receivable 
This  transfer  may  be  made  daily,  weekly,  or  monthly,  but  the  period 
between  transfers  should  never  be  longer  than  one  month.  Delin- 
quent accounts  may  be  indicated  in  the  installment  ledger  by  placing 
a  metal  tab  of  some  distinctive  color  on  the  ledger  sheet  or  card,  or 
they  may  be  segregated  by  transferring  them  to  a  special  delinquent 
binder  or  file. 


231 


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232 


THE  CREDIT  ORGANIZATION  43 

When  a  payment  is  received  on  a  delinquent  account,  that 
account  immediately  becomes  live,  and  the  amount  should  be  trans- 
ferred by  journal  entry  to  Installment  Accounts  Receivable.  The 
journal  entry  would  be: 

Installment  Accounts  Receivable 

Installment  Accounts  Delinquent 
Each  day,  the  amount  of  accounts  revived — delinquent  accounts  on 
which  payments  have  been  received — should  be  ascertained.  If  it 
is  desired  to  save  the  labor  of  making  journal  entries  daily,  a  memo- 
randum of  these  amounts  may  be  kept  and  a  journal  entry  made  at 
the  end  of  the  month. 

WTien  a  delinquent  account  reaches  the  condition  where  it  is  con- 
sidered worthless,  the  amount  should  be  charged  to  profit  and  loss, 
by  the  journal  entry: 

Profit  and  Loss  ' 

Installment  Accounts  Delinquent 

This  should  be  done  whenever  the  credit  man  carefully  exam- 
ines all  delinquent  accounts,  which  should  be  not  less  frequently 
than  once  a  month.  WTien  payments  are  received  on  these  accounts, 
they  should  be  treated  as  revived  accounts,  with  proper  credit  to 
profit  and  loss,  if  revived  during  the  current  fiscal  period;  but  if, 
in  the  meantime,  the  books  have  been  closed,  they  should  be  treated 
as  new  accounts. 

It  is  quite  necessary  for  the  credit  man  to  know  every  day  how 
the  installment  accounts  are  running.  That  he  may  do  this,  a  daily 
report,  as  shown  in  Fig.  26,  should  be  made  by  the  installment  col- 
lection clerk.  The  report  form  should  be  in  loose-leaf,  and  if  the 
installment  sales  are  divided  by  departments,  the  necessary  number 
of  columns  to  accommodate  the  departmental  records  may  be  pro- 
vided. 

The  report  is  headed  with  the  amounts  of  accounts  outstanding, 
divided  as  to  live  and  delinquent.  New  accounts  opened  and  delin- 
quents revived  arc  added  in  the  live  column,  and  delinquents  revived 
are  deducted  from  the  delinquent  column.  Cash  collections,  dis- 
counts and  allowances,  and  delinquents  today  are  deducted  separately 
from  the  live  accounts,  and  delinquents  today  added  to  the  delinquent 
column.  Then  the  delinquents  charged  to  profit  and  loss  are  de- 
ducted from  the  delinquent  column.     The  balances  represent  tlio 

233 


Contf^eflia. 


vAmount^,. 


Dsfe^ 


Co//Qcf}'on.  Laf9 


Harm, 


:  Acf(/fQSS 


/nsttum^/it^ 


,/ydu. 


HaAQ  of  ^ifrvmortt^ 


<0 

5 

' 

i 

■> 
^ 

' 

Fig.  27.    Front  and  Back  oX  Collector's  Card 


234 


THE  CREDIT  ORGANIZATION  45 

net  amount  of  outstanding  accounts,  and  must  agree  with  the  two 
controlhng  accounts,  Installment  Accounts  Receivable  and  Install- 
ment Accounts  Delinquent. 

Such  a  report  enables  the  manger  or  credit  man  to  keep  in  touch 
with  the  actual  condition  of  installment  accounts.  As  a  rule,  three 
copies  should  be  made,  one  for  the  manager,  one  for  the  credit  man, 
and  one  to  be  kept  on  file  by  the  Collection  clerk. 

Filing  Contracts.  Some  houses  follow  the  practice  of  allowing 
the  collector  to  carry  the  original  contracts,  and  in  such  cases  the 
contracts  are  filed  according  to  the  dates  on  which  payments  are  due. 
It  is  claimed  that  it  is  necessary  for  the  collector  to  have  the  contract, 
as  the  customer  is  quite  liable  to  lose  the  duplicate  and  may  ask  for 
particulars  about  the  items  purchased. 

This  plan  is  not  advocated  on  account  of  the  liability  of  loss 
of  contracts.  If  it  is  desirable  for  the  collector  to  carry  the  contract, 
a  third  copy  should  be  made  for  that  purpose.  Original  contracts 
should  be  kept  in  a  fire-proof  safe,  and  should  be  filed  in  numerical 
order.  The  most  convenient  file  is  a  document  file,  in  which  contracts 
can  be  filed  folded. 

Collector's  Card.  The  most  convenient  method  of  handling 
collections  is  to  supply  the  collector  with  cards  as  shown  in  Fig.  27. 
On  the  face  of  this  card  is  a  record  of  particulars,  similar  to  that 
shown  on  the  outside  of  the  contract,  while  the  reverse  is  ruled  for  a 
record  of  payments. 

Since  all  contracts  call  for  payments  on  certain  days  of  the  week 
or  month,  it  is  very  necessary  that  the  collection  cards  be  brought 
to  notice  on  the  collection  days.  A  simple  method  of  providing  for 
this  is  to  use  a  card  file  equipped  with  a  set  of  thirty-one  numbered 
guides  to  represent  the  days  of  the  month,  or  a  set  of  guides  printed 
witli  the  days  of  the  week.  The  cards  are  filed  back  of  the  guides 
which  represent  the  collection  days. 

It  is  customary  to  divide  the  city  into  sections,  assigning  a  col- 
lector to  each  section,  the  number  depending  on  the  size  of  the  city 
and  the  number  of  accounts.  It  is  necessary  to  use  us  many  files  as 
there  are  collectors,  with  mi  oUicc  file  addrd  for  Ihosc  who  j)n'fei'  to 
pay  at  the  office. 

Every  morning  cacli  collector  is  given  the  cards  on  his  route, 
on  which  payments  are  due.     On  his  return,  he  turns  in  all  cards  to 

235 


10 


THE  rPvEDTT  ORGAXTZATTOX 


tlio  cashier  with  tlu'  amount  colk'ctcd.      It"  a  back  call  is  necessary, 
the  card  is  filed  aiiead  a  day  or  two. 

riie  cards  in  the  office  file  are  placed  on  the  cashier's  desk  each 
nioi-ning  and  payments  are  recorded  as  made.  Those  on  which  no 
payments  are  recorded  are  kept  on  the  desk,  and  after  a  reasonable 
time  are  given  to  a  collector  to  follow  np. 

When  payments  have  been  recorded  in  the  cash  l)o()k,  all  cards 
are  again  placed  in  the  files  nnder  the  next  collection  dates.  They 
are  then  readv  for  the  collectors. 


Re.c<zipf-  fio. . 
L/TTLE  Rock  Ark. 


Confracf     A'o. . 
Reoeii/ed  of  _ 


Dol/<3rs  f'o  be  cre.dif'ec/  3s   fo//ou/s 


Piano  Department 


Talking  Machine    Department 


Bills 
Rcc. 


Dray- 
age 


Tuning 


Pianola 
Dcpt. 


Cash 
Paqmt 


Sund- 
ries 


Bills 
Rec. 


Misc. 
Accts, 


Dealers 
Accts 


Sund- 
ries 


Lt-TTLE.    HocH  Miy^s/c    Co. 
Bl, 


Fig.  28.     Receipt  for  Installment  Collections 

Collector's  Receipt.  Some  method  is,  of  course,  necessary  for 
checking  up  the  collectors,  and  to  insure  the  turning  in  of  all  money 
collected.  A  very  satisfactory  plan  has  been  devised  by  the  cashier 
of  a  western  music  house,  in  the  forrd  of  a  duplicate  receipt  as  shown 
in  Fig.  28.  These  receipts  are  bound  in  book  form  and  numbered 
in  duplicate,  the  original  being  perforated. 

The  receipt  is  especially  convenient  for  the  customer,  as  it  shows 
exactly  how  the  payment  is  to  be  credited.  For  the  same  reason,  it 
it  is  equally  convenient  for  the  cashier.  All  of  the  numbered  receipts 
must  be  accounted  for;  if  one  is  spoiled,  it  must  be  turned  in,  which 
provides  an  effective  check  on  the  collector. 

Mail=Order  Installment  Collections.  An  increasing  volume  of 
installment  business  is  now  done  by  mail.     An  established  principle 


236 


THE  CREDIT  ORGANIZATTON  47 

of  the  mail-order  business  is  that  customers  must  he  given  an  oppor- 
tunity to  inspect  the  goods  before  they  can  be  expected  to  make  a 
binding  contract  for  their  purchases.  Beginners  in  the  mail-order 
field  are  quite  likely  to  look  on  this  as  an  impractical  plan,  fearing 
the  loss  of  goods,  but  experience  soon  teaches  them  that  it  is  the  only 
plan  on  which  the  business  can  be  successfully  conducted. 

AMien  experienced  mail-order  men,  with  the  courage  to  try  out 
a  new  idea,  experimented  on  the  plan  of  allowing  customers  to  return 
goods,  they  found  that  the  more  liberal  the  offer,  the  more  business 
they  did.  This  led  to  the  giving  of  an  absolute  guaranty,  offering 
to  ship  goods  on  approval  with  the  privilege  of  return  for  any  reason 
within  certain  time  limits. 

As  the  fear  of  loss  of  goods  became  less  pronounced,  it  was 
argued  that  more  liberal  terms  of  payment  could  be  granted  with 
safety — if  goods  could  be  sold  successfully  on  the  installment  plan 
to  local  customers,  why  not  by  mail?  A  trial  proved  the  plan  to  be 
practical,  and  now  many  articles  are  sold  by  mail  on  the  installment 
or  easy  payment  plan.  Goods  are  even  shipped  without  an  advance 
pavment,  either  the  goods  or  the  first  payment  to  be  returned  within 
a  certain  time  limit. 

In  selling  goods  by  mail  on  the  installment  plan,  it  is  necessary 
to  secure  a  binding  order,  in  which  the  customer  agrees  to  return  the 
goods  within  a  certain  number  of  days,  or  make  the  payments  as 
specified,  with  an  agreement  that  title  to  the  goods  shall  be  held  by 
the  seller  until  all  payments  have  been  made  according  to  contract. 
The  contract  must  also  give  the  seller  the  right  to  recall  the  goods 
whenever  the  customer  shall  fail  to  make  a  single  payment  as  agreed. 

The  success  of  the  mail-order  installment  business  depends 
largely  on  the  manner  in  which  collections  are  handled.  Not  having 
the  advantage  of  personal  contact  with  the  customer,  the  collector  is 
obliged  to  depend  on  the  knowledge  of  the  man  which  he  gains  from 
references  and  the  correspondence  of  the  customer.  But  Ihe  shrewd 
collector  soon  learns  to  read  his  man  from  the  general  tone  of  the 
correspondence,  and  sometimes  from  the  absence  of  commuiu'cations 
from  the  delator.  When  he  has  learned  (lie  character  of  (lie  man, 
he  can  handle  each  accoimt  independently;  until  then,  lie  is  obliged 
to  follow  the  same  line  of  action  in  all  cases,  depending  mi  (he  law  of 
averages  to  prove  the  correctness  of  his  theories. 

237 


4S 


THE  CREDIT  ORGANIZATION 


Too  great  emphasis  cannot  be  placed  on  the  importance  of  study- 
ing the  character  of  the  man.  It  i.s  only  by  paying  special  attention 
to  this  point  that  the  collector  can  learn  to  treat  each  account  in- 
dividually. In  the  first  place,  the  class  of  goods  sold  largely  governs 
the  class  of  customers  from  a  credit  standpoint.  The  men  who  buy 
sets  of  business  books  are,  as  a  rule,  safe  credit  risks.     Their  training 


/V<3/77e                                                                                           A'o 

'-'~^                            Residence                              /^o.Psyement                 Doe   JDaf<z 

Business,  A&dress                                     Reference 

Source 

PncQ.                              BooAs                  Dafe  Books  s,e.ni-   i/ig. 

Da^e 

De6//-s 

Cr&dih 

V 

Ba/Snce 

Dafe 

Dsb!f-s 

Credifs 

2/ 

Balance. 

) 

^ 

Fig.  29.     Loose-Leaf  Ledger  for  ^rail-Order  Collections 

and  environment  have  a  tendency  to  teach  them  the  importance  of 
fulfilling  an  obligation;  appreciating  the  necessity  of  maintaining 
their  credit  standing,  they  will  make  every  effort  to  carry  out  the  terms 
of  the  contract,  or  give  a  valid  reason  for  asking  an  extension  of  time. 
Illustrating  the  opposite  extreme  is  the  class  who  will  sign  a  contract 
for  the  purchase  of  a  cheap  musical  mstn'ment,  at  a  high  price,  to 
gratify  a  desire  to  outdo  a  neighbor,  without  regard  to  their  ability 
to  make  the  pa^-ments  as  agreed.  Such  people  trust  to  luck,  and 
expect  to  pay  in  promises  if  they  do  not  happen  to  have  the  money: 
For  this  reason,  the  percentage  of  profit  that  must  be  added  to  cover 


238 


THE  CREDIT  ORGANIZATION 


49 


the  cost  of  collection  increases,  as  the  quality  of  the  goods  and  the 
standard  of  the  credit  risk  decrease. 

The  Account.  Accounts  with  mail-order  installment  buyers  are 
handled  in  a  similar  manner  to  those  of  local  buyers.  All  contracts 
should  be  numbered  as  received,  and  registered  in  numerical  sequence. 
The  form  of  register  already  shown  answers  the  purpose  very  nicely. 

After  registering,  the  particulars  of  the  contract  should  be  entered 
in  the  ledger.  A  form  of  ledger  sheet  used  by  a  publishing  house 
is  shown  in  Fig.  29.  This  is  loose-leaf,  and  does  not  differ  in  form 
from  the  ordinary  balance  ledger,  except  in  the  particulars  given  at  the 


'^^""^                                                                          B,L.LiH&    Card 

//o. 

R(S5id<sncQ.                                                                    Mo.  Pdymt 

DuQ.  Def<z 

Boons 

Bu^s/ness  Address 

R<3ference                                                                  1 

Source 

Dets   En/-ere.cf 

Price 

Dafe  boohs    senf  tr/g. 

D3i-<i 

Dr. 

Cr 

Bahnca 

n<3f-s 

Dr 

Cr 

Ba/ancQ 

Ds^<z 

Dr 

Cr 

B^hnco 

Fig.  30.     Mail -Order  Collection  Card 

head  of  the  sheet.  Here  is  shown  the  name  and  botli  residence  and 
business  address  of  the  customer,  number  of  contract,  monthly  pay- 
ment and  due  date,  references,  source  of  order,  ])rice  and  name  of 
V)ooks,  and  date  of  shipment.  These  sheets  are  filed  in  post  binders, 
five-hundred  sheets  to  the  binder,  and  indexed  alphabetically. 

The  next  step  is  to  enter  the  contract  on  a  collection  card.  A 
satisfactory  form  is  shown  in  Fig.  30.  This  is  a  card  I  X  <"»  inches 
in  size,  and  is  practically  a  duplicate  of  the  ledger  sheet.  The  card 
is  filed  in  a  chronological  file  under  the  due  date^that  is,  if  payments 
are  due  on  the  24th  of  the  month  the  card  is  filed  under  that  date. 
Except  when  removed  from  the  file  for  the  use  of  the  collector,  or  to 


239 


.50  THE  TREDIT  ORGANIZATION 

(Mitcr  pMyinoiits,  the  ciud  is  alwav'^  iWvd  iiiulcr  the  same  date.  If  It 
Ih-cdihos  iK'cessary  to  have  an  ac-count  hroiiirht  to  notice  on  other  than 
the  reti;uhir  collection  dates,  u  memo  is  made  on  a  separate  card  and 
filed  in  a  special  tickler. 

Should  it  become  necessary  to  refer  to  a  card  on  other  than  the 
rci^ular  collection  dates,  reference  to  the  ledger — indexed  alpha- 
betically— ogives  the  due  date,  hy  which  it  is  quickly  located.  Some- 
times, however,  it  is  desirable  to  refer  to  all  contracts  in  a  given  terri- 
tory. To  make  this  possible,  a  card  file  with  indexes  printed  with  the 
names  of  states  and  cities  is  provided.  For  each  contract  a  plain  3-X 
5-inch  index  card  is  used,  the  name,  address,  and  contract  number 
only,  being  entered.  This  provides  a  complete  set  of  indexes — 
alphabetical  in  the  ledger;  numerical  in  the  register;  by  due  dates 
in  the  collection  file;  geographical  in  the  card  file. 

AMien  a  payment  is  received,  it  is  entered  in  the  cash  book  and 
posted  to  both  the  ledger  and  the  collection  card.  Every  card  must 
be  located  at  the  time  payments  are  entered  in  the  ledger,  or  the  cus- 
tomer will  very  likely  receive  notices  after  he  has  made  the  payment. 

The  Collection  Follow=Up.  The  promptness  of  the  follow-up 
on  this  class  of  collections  is  of  the  greatest  importance — the  debtor 
should  not  be  given  the  excuse  that  he  failed  to  received  a  notice. 
Though  not  provided  for  in  the  contract,  the  debtor  expects  a  notice 
of  every  payment  due. 

AMien  the  goods  are  shipped,  a  formal  notice  of  shipment  should 
be  mailed,  and  if  the  first  payment  has  not  been  made,  it  should  lie 
requested.  In  ten  days,  or  after  the  approval  time  limit  has  expired, 
a  second  notice  should  be  mailed,  provided  no  payment  has  been 
received.  This  can  be  a  formal  notice,  and  should  assume  that  the 
goods  are  entirely  satisfactory,  and  the  same  time  calling  attention  to 
the  fact  that  the  first  payment  is  past  due.  If  this  does  not  bring  a 
remittance  within  ten  days,  it  is  well  to  send  a  draft  notice.  This 
notice  should  go  into  the  conditions  of  the  contract  in  some  detail, 
and,  without  assuming  a  threatening  attitude,  it  should  assume  that 
if  payment  is  not  received  within  five  days  it  is  the  desire  of  the  debtor 
that  a  draft  be  made.  Either  the  notice  or  the  draft  will  usually 
bring  the  first  payment,  or  the  return  of  the  goods. 

Each  month,  a  formal  statement  showing  the  exact  condition  of 
the  account  should  be  mailed  a  few  days  before  the  due  date.      It  is 

240 


THE  CREDIT  ORGANIZATION 


51 


well,  on  this  statement,  to 
make  an  offer  of  a  discount 
for  cash  to  pay  the  account  in 
full.  A  discount  of  5%  on  an 
account  that  has  several 
months  to  run  will  often  be 
accepted,  and  is  profitable  to 
both  parties.  This  statement 
should  be  followed  in  ten  days 
by  a  second  notice,  also  of  a 
formal  nature. 

All  n  o  t  i  c  e  s  up  to  this 
point  may  be  printed,  but  fur- 
ther requests  should  be  in  the 
form  of  letters.  Except  when 
it  has  been  found  that  an  ac- 
count should  be  handled  in  a 
special  manner,  form  letters 
will  be  found  most  satisfactory. 
The  letters  should  start  out 
mild  in  tone  increasing  in  insist- 
ence as  the  series  is  extended. 

When  persuasion  fails, 
the  debtor  should  be  notifietl 
that  the  account  is  being 
placed  in  the  hands  of  an 
attorney,  or  a  collection 
agency.  But  before  suit  is 
actually  started,  it  is  well  to 
investigate  the  probability  of 
collecting  a  judgment.  If  ;i 
man  is  judgment  proof,  it  is 
much  l)etter  to  take  the  neces- 
sary steps  to  secure  the  return 
of  tlie  goods,  '^riiis  is  usiiiilK 
accomplished  by  re(|nesliiig 
the  express  company  to  call  on 
the  debtor  for  the  package. 


o 
u 
-J 

c5 

1 

/ 

10 

cs 
o 

o 
U 

5 

O 

' 

O 

' 

0 

' 

u 

ft; 

0 

1 

211 


52 


TIIK  rREDTT  ORGAXIZATTOX 


Every  debtor  has  his  vulnerable  pohit;  if  that  point  is  reached, 
the  money  can  be  collected.  The  most  successful  collector  is  the  one 
who  finds  that  point  in  the  largest  number  of  cases. 

Collections  by  Attorneys.  The  handling  of  collections  consti- 
tutes an  important  part  of  the  practice  of  many  attorneys.  It  would 
naturally  be  supposed  that  attorneys  handling  collections  for  their 
clients  would  have  an  efficient  system  of  records,  but  unfortunately 
this  is  not  the  rule.  Except  in  offices  handling  a  large  number  of 
claims  the    methods  are  very  lax — there  is  an  entire  absence  of  a 


Debtor 

Address 

Dsfe   nof/Y/ed 

Crcc/ifor 

Address 

Amount 

/?e  c'd  from               3e.nt  to 

Address 

D.3t-<z            No. 

Co//e  cf/ons 

F'ees 

Hem/f-fances 

Defo. 

Amount 

Correspon- 
dent 

Our 

Date 

Amount 

R<zmarks 

Fig.  32.     Attorney's  Collection  Card 

system  that  will  reveal  the  exact  status  of  every  claim.  And  yet  to 
install  a  system  that  will  give  just  the  information  desired  is  very 
simple,  and  the  operation  requires  less  labor  than  to  handle  the 
claims  in  a  haphazard  way. 

AMien  a  claim  is  received  by  an  attorney,  it  should  be  given  a 
number,  and  registered  in  numerical  order.  The  register  should  be 
a  }x)ok — either  loose-leaf  or  bound — with  headings  for  the  date  re- 
ceived, names  of  debtor  and  creditor,  amount  of  claim,  amount  col- 
lected, fees,  amount  remitted,  and  date  remitted  or  returned,  as 
shown  in  Fig.  31.  This  is  not  intended  as  a  complete  history  of  the 
claim,  but  merely  as  a  permanent  record. 

The  papers  in  each  claim  should  be  placed  in  a  folder.  The 
old  method  w^as  to  use  a  manila  jacket  or  document  envelope,  to  be 

242 


THE  CREDTT  ORCANIZATION 


53 


filed  in  a  document  file.  The  objectionable  feature  of  this  method 
is  that  the  papers  must  be  unfolded  for  reference.  A  better  plan  is 
to  use  a  correspondence  folder,  such  as  is  used  in  the  vertical  file,  in 
which  the  papers  can  be  kept  flat. 

AMiatever  style  of  folder  is  used,  all  papers  should  be  fastened — 
either  pasted,  or  by  means  of  a  paper  fastener.  On  the  outside  of 
the  folder  should  be  written  the  names  of  debtor  and  creditor,  and  the 
number  of  the  claim.  The  balance  of  the  space  on  the  folder  can  be 
used  for  recordino-  special  information  about  the  claim  from  time  to 
time.  These  claim  folders  should  be  filed  numerically,  according  to 
claim  numbers. 


Cease  of  <schon 

Court- 

Counsel                                                        P/ff 

Dizft 

Summons  issued 

Continuance 

JudgemQnt-<3mounf 

Refurngb/Q 

Officer 

Costs 

Sert/ed 

Fees 

Transcript 

Execution  issued 

Officer 

Receipts 

De/iLf<zred 

FQ.es 

Disiiursements 

Returned 

Remarks 

Fig.  33.      Hack  of  Attorney's  Collectioii  Card 

For  a  convenient  record  for  daily  reference,  giving  a  brief  history 
of  the  claim,  a  card  is  found  very  satisfactf)ry.  The  folders  are  some- 
what })ulky  and  inconvenient  for  (juick  reference,  and,  except  in 
special  cases,  it  is  not  necessary  to  refer  to  all  of  the  papers.  Brief 
notes,  which  can  be  made  on  a  card,  will  answer  every  purpose. 

A  convenient  record  form  is  shown  in  Fig.  32,  which  is  printed 
on  a  card  4  X  ^')  inches  in  size.  This  gives  the  particulars  of  the 
receipt  of  the  claim,  the  amount,  dale,  and  number,  with  a  record  of 
collections,  fees,  and  r(>mittances.  A  card  is  made  for  each  claim, 
and  filed  alphabetically  under  the  name  of  the  debtor.     The  reverse 


243 


tA 


TTTE  TREDTT  ORGANTZATTON 


of  the  card  is  printed  as  shown  in  Fig.  33.     This  sliows  the  different 
steps  taken  to  enforce  collection. 

The  card  file  provides  an  index  to  all  debtors  against  whom 
claims  are  on  file,  while  both  the  register  and  the  file  of  folders  provide 
numerical  indexes.  But  it  is  the  creditor  Avho  is  the  client  of  the  at- 
torney, and  it  is  very  necessary  that  he  hv  in  a  position  to  refer  to  or 
report  on  all  claims  received  from  any  client.  This  necessitates 
another  index  to  creditors,  which  is  provided  for  in  the  card  form 
shown  in  Fig.  34. 


C/-e(///-or 

Addr<iss 

JWa 

Dzdfor 

Refurned 

Fig.  34.     Index  to  Creditors  for  Attorney 

The  card  is  headed  with  the  name  and  address  of  the  creditor, 
below  which  is  a  list  of  all  claims  filed  by  him.  When  a  claim  is 
returned — paid  or  unpaid — the  date  is  entered  on  this  card,  so  that 
the  record  shows  only  unpaid  claims.  These  cards  are  filed  alpha- 
betically, under  the  names  of  the  creditors. 

A  follow-up  of  the  claims  is  provided  by  a  plain  index  card  on 
which  is  written  the  name  of  the  debtor  and  number  of  the  claim. 
This  card  is  filed  in  a  tickler,  under  the  date  on  which  it  is  desired  to 
follow  up  the  claim.  This  serves  as  a  memorandum  only,  all  records 
being  made  on  the  claim  card  or  the  folder. 


244 


BILLING  AND  ORDER 
RECORDING 


Introduction.  The  survival  of  the  fittest  applies  most  force- 
fully to  business  men  and  their  methods.  The  success  of  the  men 
depends  upon  their  methods;  the  efficiency  of  the  methods,  upon  the 
men.  Large  corporations  of  to-day  would  be  impossible  without 
method.  They  plan  their  work,  and  method  tells  them  daily 
whether  they  are  working  their  plan  successfully  or  unsuccess- 
fully. 

It  is  commonly  supposed  by  th«  smaller  business  men  that 
method  is  a  residt  of  business  growth.  Sometimes  it  is.  If  a  busi- 
ness grows  fast,  better  methods  become  a  necessity.  Without  method 
any  business  must  remain  small — with  few  exceptions,  just  as  small 
as  the  capacity  of  the  man  at  the  helm.  "To  the  extent  which 
system  is  intelligently  used,  it  multiplies  one's  powers  of  achievement 
in  all  directions." 

The  importance  of  the  order  billing  and  shipping  departments, 
the  amount  of  waste  effort  therein,  and  the  relation  of  each  to  all 
other  branches  of  the  business,  make  them  a  most  interesting  and 
profitable  study  for  the  progressive  business  student,  whether  he  be 
a  beginner,  an  executive,  or  an  owner.  To  attain  (juick  results 
and  to  eliminate  useless  head,  hand,  and  leg  work,  learn  the 
capacity,  capability,  and  usefulness  of  office  machinery  and  the 
short-cut  methods  made  possible  thereby. 

During  the  last  eight  years  there  has  been  a  tremendous  amount 
of  improvement  made  both  in  this  country  and  abroad  in  handling 
office  work,  changing  from  hand  to  machine  methods.  ^lost  of 
these  improvetncuts  have  been  literally  forced  uj)on  the  business 
inen  of  the  country  by  spcciaUy  (•()nij)anies  having  labor-saving 
devices  for  sale.  Wide-awake  merchants  have  in  some  cases  left 
the  installation  of  such  devices  to  office  pco])le  who  feared  the  losj? 
of  their  positions  through  the  use  of  them. 


245 


2  BTTJJXG  AXn  ORDER  RECORDING 

One  of  tlu"  pioneers  in  tlie  development  of  the  class  of  work 
above  mentioned  is  Hiram  J.  Ilalle,  who  overcame  all  obstacles, 
and  gave  the  impetus  to  modern  billing  methods  which  has  been  such 
a  help  to  our  economic  results  in  office  practice.  The  typewriter 
companies  have  followed  his  lead  and  equipped  cylinder  machuies 
with  the  necessary  attachments  for  accomplishing  almost  any  desired 
result,  except  writing  in  a  bound  book.  In  order  to  overcome  this 
obstacle,  the  ^McMillan  and  the  Empire  and  some  other  loose-leaf 
books  have  been  invented.  These  books  are  loose-leaf  only  while 
they  are  being  Avritten  upon;  after  completion  they  are  permanently 
bound  by  a  simple  device,  and  become  as  secure  as  a  sewed  book. 

In  any  book  of  this  character,  the  student  must  consider  the 
text  as  a  series  of  problems,  with  explanations  of  how  each  has  been 
solved.  If  the  student  does  not  learn  to  exercise  his  own  powers  of 
originality  as  a  result  of  a  study  of  this  volume,  he  will  fail  to  secure 
the  result  intended.  Rarely,  if  ever,  will  two  problems  be  met  in 
two  commercial  establishments  which  will  be  alike.  The  judg- 
ment of  the  person  installing  the  system  \vill  determine  the  best 
method  to  be  used  under  certain  conditions. 

Before  starting  in  on  the  regular  work,  it  will  not  be  out  of  place 
to  give  a  comparison  of  the  methods  of  business  in  various  foreign 
countries. 

The  rush  in  the  business  life  of  the  United  States  is  accounted 
for  by  our  fast  growth  and  national  desire  to  accumulate  wealth. 
Commercial  concerns  have  grown  both  fast  and  slowly  to  undreamed 
proportions.  Strenuous  efforts  have  been  made  to  secure  business^ 
and  then  a  corresponding  effort  has  been  made  to  effect  the  small 
economies  which  in  a  large  business  aggregate  large  sums.  As  a 
nation,  we  are  rushing  at  headlong  speed,  seekmg  all  the  means  which 
will  give  us  results.  In  transportation  we  advance  from  steam  to 
electricity;  in  social  life  we  turn  from  horses  and  carriages  to  auto- 
mobiles; in  commercial  life  we  use  every  known  device  to  short-cut 
the  work  and  effect  economies — adding  machines,  tvpewriters,  cash 
registers,  envelope  openers,  envelope  sealers,  multigraphs,  etc. 

A  distinct  surprise  awaits  the  person  visiting  Europe  on  a  mission 
of  introducing  "short-cut"  methods.  ^Yhile  we  are  in  business  to 
make  all  the  money  we  can,  most  of  the  Europeans  are  in  business 
to  make  a  living,  or  reasonable  earnings. 

246 


BILLING  AND  ORDER  RECORDING  3 

Imagine  the  surprise  of  the  writer  when  told  by  the  managing 
director  of  one  of  the  largest  department  stores  in  London  that  they 
did  not  care  to  save  the  services  of  thirty-five  clerks  (which  was 
possible  by  modern  methods)  as  they  were  making  a  certain  amount 
of  money  each  year,  and  did  not  care  to  make  any  more;  besides, 
they  did  not  wish  to  put  these  people  out  of  positions.  It  is  not  an 
easy  matter  to  secure  positions  in  England.  Employes  are  very 
diligent  and  pay  strict  attention  to  business.  A  manager  of  one  of 
the  large  banks  in  London  said  that  once  a  clerk  is  hired  he  is  dis- 
charged for  gross  misconduct  only — not  even  ^for  incompetency. 
There  are  young  men  clerks  (pronounced  darks)  in  the  Bank  of 
England  who  are  doing  the  same  work  for  the  bank  as  done  by  their 
grandfathers.  There  are  old  men  in  the  Bank  of  England  to-day 
who  still  use  quill  pens  and  the  sand  box  instead  of  a  blotter.  There 
are,  however,  adding  machines  being  used  there  by  the  younger 
generation,  and  they  are  of  more  use  to  them  than  to  us  in  a  way,  as 
their  currency  is  so  much  more  difficult  to  add. 

Each  year,  more  improved  methods  are  being  introduced  into 
England.  Typewriters  have  been  used  for  a  number  of  years,  and 
of  late  years  adding  machines  have  made  headway.  It  is  more 
difficult  there  to  introduce  new  methods,  but,  once  installed,  it  is 
difficult  to  dislodge  them  for  other  ones. 

Some  of  the  wholesale  houses  have  very  old  methods.  In  one 
house  in  London,  an  order  was  copied  twenty-nine  times  from  the 
time  it  was  received  until  it  was  finally  charged.  The  concern  was 
over  two  hundred  years  old  and  had  never  made  any  effort  to  improve 
its  methods.  It  had  four  boys  whose  duty  it  was  to  hunt  orders  lost 
about  the  warerooms.  A  system  of  manifolding  was  installed,  which 
eliminated  so  much  waste  of  time  in  copying  and  recopying  orders 
that  it  was  difficult  to  convince  the  firm  that  something  had  not  been 
overlooked.     After  four  weeks  they  were  delighted. 

An  American  going  abroad  is  much  impressed  by  the  delibera- 
tion of  Europeans  and  is  inclined  to  criticise  them  for  it.  After  a 
time,  they  can  point  out  enough  Americans  who  have  worn  out  at 
forty  years  of  age,  and  are  in  Europe  seeking  health,  to  convince 
them  that  perhaps  the  Europeans  are  not  wholly  wrong. 

In  Germany,  the  railroads  are  controlled  by  the  government. 
When  one  attempts  to  introduce  short-cut  methods,  he  is  confronted 

247 


4  BILLING  AND  ORDER  RECORDIXG 

by  the  fact  that  work  is  needed  to  keep  l)usy  old  soldiers  for  whom 
the  government  has  to  care.  In  asking  an  agent  of  an  American 
firm  dealing  in  labor-saving  devices  why  he  did  not  use  any  of  the 
devices,  the  answer  was  given  that  in  Germany  the  young  men  work 
three  years  for  nothing;  he  did  not  feel  the  necessity  of  doing  away 
with  any  of  them.  At  the  end  of  three  years'  work  in  an  office,  a 
young  man  receives  a  diploma  for  efficiency,  if  he  has  attained  it. 
The  government  exercises  a\strict  supervision  over  all  commercial 
concerns,  and  inspects  their  books  at  periodic  intervals.  Com- 
mercial failures  are  therefore  more  rare  there  than  at  home.  Fraud- 
ulent schemes  are  dealt  with  severely. 

There  are  many  large  firms  in  Germany,  both  jobbers  and 
manufacturers,  that  are  striving  to  be  progressive.  The  Siemens- 
Halske  Electric  Co.  are  just  as  progressive  in  their  order  and  billing 
methods  as  any  American  firm  in  the  same  line.  To  show  the  atten- 
tion to  details  given  by  the  Germans — a  managing  director  of  one 
of  the  large  department  stores  in  Berlin,  when  asked  how  long  he 
had  lived  in  the  United  States,  said  he  had  never  been  there.  Upon 
being  complimented  upon  his  American  accent,  he  replied  that  when 
talking  to  an  American  he  always  used  the  American  accent,  slang, 
intonation,  etc.,  and  when  talking  to  an  Englishman  he  changed 
his  accent,  etc.,  to  correspond.  He  had  all  the  American  devices 
in  his  accounting  department  which  one  would  find  in  any  depart- 
ment store  in  the  United  States,  and  sent  out  monthly  typewritten 
bills  the  same  as  John  Wanamaker,  Altman,  and  others  of  New  York, 
and  the  same  as  all  large  department  stores  do  in  all  American  cities. 

In  France,  the  commercial  houses  are  very  conservative  and 
are  subject  to  the  same  government  supervision  as  practiced  in  Ger- 
many. In  one  of  the  railroad  companies,  the  Chemin  de  fer  du  Nord, 
they  use  the  manibill  system  of  billing  (whereby  each  shipment  is 
billed  separately  and  manifolded  on  a  form  of  seven  sheets)  which 
is  the  shortest  form  of  billing  known,  but  which  has  never  been 
adopted  by  American  railroads  on  account  of  the  bulk  of  papers 
increasing  too  rapidly.  The  present  American  method  is  to  put  several 
shipments  on  a  way  bill  for  shipments  to  any  given  town,  and  when 
the  goods  arrive  at  the  given  town,  the  receiving  stations  make  out 
separate  freight  bills  for  each  shipment,  copying  the  information 
from  the  blanket  way  bill  made  out  at  the  forwarding  station.     Some 

248 


BILLING  AND  ORDER  RECORDING  5 

of  the  American  railroads  arc  now  adopting  the  special  roll  machine 
for  car  accountants'  work,  as  shown  in  Fig.  1. 

The.  French  people  do  not,  as  a  rule,  form  large  companies  like 
the  Americans  and  Germans  and  English.     There  are  a  larse  num- 


FiK-  1-     Underwood  Special  lloU  Machine  for  Car  Accountants'  Work 

ber  of  small  manufacturers  and  jobbers  in  France.  The  larg(>  de- 
partment stores,  like  the  Louvre,  in  Paris,  arc  run  on  a,  strictly  cash 
basis. 

MACHINES  FOR  MANIFOLDING 

Neither  the  billing  machines  (book-writing  machines)  nor  type- 
writers were  originally  intended  for  heavy  maiiii'olding  work.  'Hie 
flat-bed  billing  machines  were  originally  invented  to  write  in  l)()oks 
used  for  court  records,  sales  books,  etc.     The  book  was  lo  remain 


249 


6  BILLING  AND  ORDER  RECORDING 

stationary  and  the  machino  was  to  travel  over  the  books.  The 
flat-bed  niaehines  are  the  only  machhies  made  for  writin<^  in  bound 
books — the  latter  are  b.eing  gradually  replaced  l)y  loose-leaf  books. 
A  flat-bed  machine  for  bound  books  is  shown  in  Fii^.  2. 

The  typewriter  was  oritjjinally  intended  to  write  on  one  sheet  of 
paper  only.     If  extra  copies  were  needed,  a  copying  ribbon  was  used, 


^^^^r 


Fig.  2.     Flat-Bed  Typewriter  for  Bound  Books.     Elliott-Fisher  Co. 


and  a  wet  copy  taken  in  a  letter-press  book.  In  the  evolution  from 
bound  books  (official  record  and  commercial)  to  loose  sheets,  the 
book  t^-pewriter  was  equipped  with  devices  for  holding  loose  sheets 
of  paper — used  alone  or  in  connection  with  books.  In  the  evolution 
from  letter-press  copies  to  carbon  copies,  the  t}^ewriter  was  equipped 
with  hard-rubber  and  brass  platens  for  taking  from  one  to  twenty- 
five  copies,  and  in  some  cases  even  more,  with  extremely  thin  paper 
and  carbon  paper. 

250 


BILLING  AND  ORDER  RECORDING  7 

The  flat-bed  billing  machines  are  equipped  with  heavier  tvpe- 
bar  springs  than  the  cylinder  machines.  The  operator  in  d(>pressing 
the  k(>ys  overcomes  the  additional  resistance  to  the  touch,  due  to  the 
heavier  type-bar  springs,  and  strikes  a  heavy  blow  on  the  paper, 
making  a  good  manifold  copy  in  all  cases.     The  operator  on  a  cylinder 


Fig.  3.     Underwood  Billing  Machine 

l>illiiig  machine  strikes  a  heavier  blow  than  usual  to  secure  (he  heavy 
manifolding  results.  The  heavier  the  blow,  th(>  clearer  the  result 
on  a  billing  machine.  The  Underwood  biMing  machine  is  shown 
in  Fig.  3. 

All  typ(>wntcrs  e(jnlpj)ed  wilh  special  atlachmeiils  for  holding 
the  sales  sheets,  invoices,  and  orders  are  called  cylinder  hiUiiu/  iiki- 
chines.  The  paper  upon  which  the  machine  writes  is  held  by,  ;,nd 
passes  over  and  around,  a  round  rubber  roll,  the  cylinder. 

This  is  in   conlrast    (o   (lie   (|;it-l)C(l   bilhiig  niachincs   (or  book 


2.51 


8  BILLING  AND  OUDKll  UErORDlNG 

tyjH'writei's)  on  which  the  paper  lies  ilat  on  a  ruUlxr  ])lat('  while  the 
machine  moves  over  the  ])a])er. 

Development  of  Billing  Machines.  Tiiis  text  ha.s  l)een  prepared 
hy  takiufij  the  simplest  forms  of  bilHng  and  order  work,  and  leading  up 
gradually  to  the  more  complicated  forms.  This  is  actually  what  took 
place  in  the  improvement  of  office  and  factory  work. 

A  bill  and  a  eopy  were  first  made — an  extra  sheet  was  made 
for  some  additional  purpose.  The  advantages  of  doing  two  or  three 
things  at  once  led  to  further  investigation.  This  resulted  in  still 
additional  sheets  being  used  for  other  purposes.  Every  time  an 
additional  sheet  was  added,  the  labor  of  typewriting  that  sheet 
separately  was  eliminated. 

Gradually  it  developed  that  it  would  be  useful  to  copy  a  part 
only  of  the  t^'pew'ritten  information  on  some  of  the  under  sheets. 
]\Ieans  were  found  for  accomplishing  this.  For  instance,  on  an 
order  form,  it  was  desirable  to  have  the  prices  show  on  the  office 
copy,  but  not  on  the  copy  which  was  intended  for  the  warehouse 
or  factory. 

In  some  cases  it  was  desirable  to  write  all  the  information  on 
the  top  copies  and  split  up  the  information  thereon  on  the  sheets 
underneath.  The  final  development  of  all  the  above  ideas  is  em- 
bodied in  the  compound  form,  in  which  all  sheets  for  the  office,  cus- 
tomer, warehouse,  factory,  shipping  room,  and  loading  platform  are 
typewritten  at  one  operation,  and  the  invoice  and  duplicate  finished 
as  a  separate  operation. 

\Miolesale  and  manufacturing  lines  are  used  mostly  in  this 
text  to  illustrate  the  evolution  and  improvement  of  billing  and  order 
work.  Some  of  the  conditions  which  have  to  be  considered  in  install- 
ing office  systems  are  as  follows: 

\Miether  the  orders  are  received  from  customers  or  salesmen 

or  both,  and  which  are  in  the  majority. 
Whether   the  goods  are  carried   in  stock  or  manufactured  or 

bought  outside,  or  all  of  these. 
WTiether  the  orders  can  be  filled  completely,  or  nearly  so. 
Whether  or  not  the  factory  may  know  the  prices. 
WTiether  the  goods  are  shipped  by  freight,  mail,  express,  or  all 

of  these. 


252 


BILLING  AND  ORDER  RECORDLNG  9 

Whether  copies  of  the  bills  have  to  be  made  for  any  other  purpose. 
Whether  a  copy  of  the  sales  sheet  has  to  be  sent  to  the  home 

office,  or  made  for  any  department. 
If  additional  copies  of  either  are  necessary,  what  colors  to  use 

for  readily  distinguishing  them. 
How  many  ledger  clerks,  and  how  to  sort  their  work  to  the  best 

advantage  so  that  each  clerk  handles  his  work  only. 
How  to  file  office  and  factory  copies  for  cjuick  reference. 
How  to  plan  all  the  above  so  that  improper  filing  of  sheets  does 

not  destroy  the  chain  of  record. 

The  reasons  for  these  considerations  will  be  better  appreciated 
after  further  progress  is  made. 

If  the  business  student  learns  the  capabilities  of  office  machinery, 
the  advantage  of  manifolding,  the  use  of  colored  papers,  and  the 
important  feature  of  correctly  grouping  statistics  (which  is  almost 
an  art  in  itself),  he  will  have  accomplished  much.  He  should  learn 
also  to  develop  his  own  power  of  originality  and  suggestion. 

The  natural  order  in  which  order  billing  and  shipping  ought  to 
be  presented  is  the  way  in  which  the  transactions  occur.  Methods 
of  billing  (making  out  invoices)  in  many  businesses  govern  the  man- 
ner in  which  the  orders  are  made  up,^ind  therefore  will  be  considered 
first. 

In  order  to  more  clearly  bring  out  the  advantages  of  new 
methods,  it  is  deemed  advisable  to  consider  old-style  methods  and 
contrast  them  w'ith  the  newer  ideas.  By  showing  the  weak  points  in 
the  older  methods  and  why  the  new  are  better,  the  gradual  evolution 
and  improvements  can  l)e  traced. 

Old=StyIe  Method  of  Billing  and  Making  Wet  Copy  in  Tissue 
Book.  There  are  enough  firms  who  still  follow  this  plan  of  billing 
to  resent  the  term  "old-style."  The  Ix'st  that  can  be  said  for  this 
plan  is  that  it  is  shorter  than  writing  the  bill-and-sales  book,  or  sales 
journal,  separately.  The  wet  copy  takes  the  place  of  re-writing 
the  bill.  One  objection  to  this  method  of  copying  bills  is  that 
if  all  the  bills  are  copied  some  of  them  are  either  blurred  or  are  too 
light  when  the  copy  has  dried  on  the  tissue  leaf.  This  is  ;i  didicully 
which  can  be  corrected  by  careful  attention. 

The  worst   feature   is   that   one    never   knows   whether  all   the 


253 


10 


BTIJJXC  AND  OUDKU  Ul^XORDING 


FiK.  4. 


Old-style  Cloth  Bath. 
Typewriter  Co. 


Underwood 


bills  have  been  copied,  and  there  is  no  way  of  knowing  this  unless 

th(^  copies  in  the  tissue  book  are  checked  back  with  tlie  orders  from 

wliich  the  bills  were  made.     Many  firms  spend  thousands  of  dollars 

In  advertising,  traveling  expense,  labor,  etc.,  ship  out  and  bill  large 

invoices  of  goods,  "double  check" 
the  invoices,  and  leave  the  copy- 
ing of  the  invoices  in  tissue  books 
to  a  young  office  boy.  They  never 
think  to  check  back  the  invoices 
with  the  orders  to  be  absolutely 
certain  that  the  goods  have  been 
chdrgcd  as  well  as  invoiced 
(billed  out). 

If  one  should  ask  them  how 
they  know  that  all    invoices  are 

charged  (or  copied  into  the  tissue  books)  the  invariable  answer  would 

be,  "Oh!  we  never  lose  any  bills  before  they  are  copied."     Ask  them 

how  they  know  none  are  lost  and,  after  thinking  a  while,  they  will 

admit   that    they   really   do    not 

know  fo7'  sure.      They  begin  to 

check  back  the  tissue  book  after 

some   customer  })rings   in  a  bill 

for   payment   which    has    never 

been  copied  into  the  tissue  book, 

and  hence   has   not  been  posted 

to  the  customer's  account. 

Fig.  4   shows    the    old-style 

cloth  bath.  Fig.    5   the  old-style 

copy  press,  and  Fig.  6  the  old-style 

sales  book  (tissue  paper  leaves). 

LOOSE=LEAF  SALES  SHEETS 
AND  INVOICES 

This  style  of  billing  was  the 
first  variation  from  the  plan  of 
using  copying  ink,  or  pencil,  on  invoices  and  then  transferring  the 
ink  to  tissue  paper  books,  })y  wetting  the  leaves  with  water  and  then 
absorbing  the  surplus  water  with  paper  blotters.  Or  this  was 
done  by  placing  damp  cloths  on  the  under  side  of  the  leaf  and  cover- 


Fig.  5.    Old-style  Copy  Press. 
Typewriter  Co. 


Underwood 


254 


BILLING  AND  ORDER  RECORDING 


11 


ing  it  with  a  leaf,  placing  the  invoice  downward  on  the  tissue  leaf, 
closing  the  book,  and  placing  it  in  a  copying  press.  The  ink  from  the 
invoice  was  sufficiently  transferred  to  the  tissue  paper  to  make  an 
impression  thereon. 

If  the  person  who  did  the  copying  did  not  use  due  care,  the  paper 
would  be  too  wet  and  the  ink  would  run  and  blur  the  copy  and  the 
invoice.  If  two  invoices  were  accidently  picked  up  by  the  person 
copying,  the  top  invoice  would  not  be  copied  on  the  tissue  sheet. 


Fig.  0.     Ohl-Style  Sales  Book.      Underwood  Tyijewriicr  Co. 

This  is  a  most  serious  ol)jecti()n,  for  the  reason  that  the  copy  in  the 
tissue  was  used  as  record  of  the  invoice  for  the  purpose  of  posting  into 
the  ledger. 

Another  (hfficidty  was  the  usual  one  experienced  through  tlie 
use  of  l)oun(l  books  in  office  work.  Only  one  person  can  u.se  a  book 
at  one  time.  If  Payette  Henry,  tiie  accountant,  was  using  the 
ti.s.sue-copy  book,  and  Dave  Pike,  the  order  clerk,  wante<|  to  use  it 
to  set"  if  all  invoices  had  beoi  copied  by  the  office  boy,  he  had  to  wait 
on  Fayette  Henry.  The  loose-leaf  sales  sheet  shown  in  Fig.  7,  with 
the  pages  serially  numbered  and  plac(>d  in  proj)er  binders  after 
each  sheet  has  ])een  filed,  overcomes  all  of  (he  diflienllies  mentioned 
—  with  many  additional  benefits. 

The  loo.se-leaf  sales  sheet  and  invoice  were  liisl  used  with  the 
flat-bed  billing  machine,  the  sales  sheet   being  held   in  position  by 


255 


12 


BILLING  AND  ORDLPv  UKCOKDLXG 


■> 


r-     „  »NO  Johnson  Co. 


'^ 


I'iLI 


Loose-Leaf  Sales  Sheet  and  Invoices.     No  Killing  on 
Sales  Sheet.      Reminuton  Typewriter  Co. 


256 


BILLING  AND  ORDER  RECORDING  13 

being  placed  over  studs  (round  metal  posts),  which  fitted  into  the 
punched  holes  in  the  edge  of  the  paper.  These  punched  holes  were 
used  ultimately  for  fitting  over  the  metal  binder  posts  in  the  loose- 
leaf  binders.  The  invoices  were  wilder  than  the  regular-size  invoice 
and  were  perforated  about  1  inch  or  l^  inches  from  the  left  side, 
as  shown  in  Fig.  8.  To  the  left  of  the  perforated  edge  were  two 
small  holes  about  2f  inches  apart,  which  fitted  over  two  small  studs 
on  a  sliding  bill-holder  device.     This  plan  provided  a  means  of  hold- 


Trii    I?  \i/ii\n  >Ri:  I'kvki,  IIominv  Co. 

M.N •..  (oii.N  rK<»i)it-r(-i 


'  Fig.  8.     Invoice  for  Use  on  Billing  Machine 

ing  the  large  sheet  and  invoice  in  proper  relation  to  each  other.  A 
piece  of  carbon  paper  the  same  size  as  the  sales  sheet  was  placed 
between  the  invoice  and  the  sales  sheet.  This  ruling  of  the  sales 
sheet  is  shown  in  Fig.  9, 

When  an  invoice  was  written  on  the  billing  machine,  it  was 
manifolded  on  the  sales  sheet  beneath.  ^yh(Ml  the  invoice  was 
finished  it  was  ready  to  mail — no  delay  in  copying  invoices,  no  blurn^d 
invoices  through  careless  coj)ying.  No  fading  of  the  manifolded 
copy  where  black  carbon  paper  was  used.  Inks  are  not  made  of 
indestructible  carbons  as  black  carbon  paper  is  made.  A  con- 
densed billing  or  invoicing  loose-leaf  sales  book  for  this  purpose 
is  shown   in   Fig,  10. 

The  following  are  some  of  the  many  good  features  of  the  con- 
densed system,  as  it  is  in  use  to-day,  briefly  stated: 


257 


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258 


BILLING  AND  ORDER  RECORDING  15 

Bill  and  entry  in  sales  book  are  obtained  at  one  operation. 
Entries  upon  sales  book  agree  absolutely  with  bill  rendered. 
The  bill  clerk  becomes  bill  and  entry  clerk  combined. 
There  is  no  danger  of  a  bill  being  rendered  without  the  proper 
charge  being  made. 


Fig.  10.     Condensed  IJillitiK  or  Invoicing  Loose-Leaf  Sales  Book, 

Underwood   Tjjjiewriler  Co. 

Entries  under  this  system  occupy  l)iit  one-fourth  tlic  space  re- 
quired for  those  written  with  the  pen. 

There  is  no  waste  space  upon  sales  sheet. 

Both  sides  of  the  sales  sheet  may  be  utilized. 

The  saving  in  vault  space  alone  is  worthy  of  special  consideration. 

In  recent  years,  the  typewriter  comj)auies  have  plac(!(l  deviccvs 
on  their  typewriters  which  permit  of  the  sales  sheet  being  held  in- 
dependently of  till'  invoices.  This  pennils  one  (o  hold  llif  Iiirgc  sales 
sheet  in  the  machiu*'  until  enough  invoices  have  been  mauifolded 
thereon  to  cover  the  ])agc,  at  which  time  the  sitles  sheet  is  reversed. 
The  invoices  can  ]»e  ])Iiiced  in  the  niaehine  iind  removed  therefrom 
after  being  written,  without  interfering  with   the  sales  sheet.     No 


2fi'J 


16 


RILLIXG  AND  ORDER  RECORDING 


extra  wulth  of  invoice  is  required,  which  permits  of  old  stationery 
beinjr  used  in  the  form  of  invoices.  The  flat-bed  machines  can  use 
old  stationery,  but  not  quite  so  well.  However,  when  billing  by 
machinery,  it  is  false  economy  to  use  stationery  designed  for  pen 
work.     The  reasons  for  this  will  be  touched  upon  later. 

The  use  of  two  ledgers  necessitates  the  use  of  two  columns  at 
the  right  side  of  the  page.  All  names  from  A  to  L  are  placed  in  the 
first  column;  all  names  from  M  to  Z  are  placed  in  the  second.  For 
instance,  an  invoice  reading  as  shown  in  the  sales  journal,  Fig.  11, 
illustrates  the  idea  of  writing  the  total'5  in  the  two  columns  at  the 
vight  side  of  sheet  according  to  the  initials  of  the  last  name  of  the 
firm  or  the  individual,  as  the  respective  ledgers  are  arranged  in  that 
manner.  If  at  the  end  of  the  month  the  first  column  shows  a  total 
of  $3,000.00  the  book  keeper  knows  that  he  has  posted  that  amount 
into  Ledger  A-L,  etc. 

The  above  plan  enables  the  bookkeeper  to  add  separately  the 
totals  which  are  posted  to  the  respective  ledgers.  The  desire  to 
separate  the  charges  to  a  country  ledger  and  a  city  ledger  can  be 
accomplished  by  using  two  columns  in  the  same  way. 

The  desire  to  place  all  credit  memoranda  in  the  sales  book  can 
be  accomplished  by  using  two  columns  in  the  sales  book  as  noted 
above.  The  first  column  is  used  for  the  charges,  and  the  second  one 
for  entering  the  credits.  One  difficulty  arises  in  connection  with 
this  plan.  Credits  are  liable  to  be  entered  in  the  debit  column. 
To  obviate  this,  the  invoices  are  made  just  wide  enough  to  reach  over 
the  first  column,  the  credit  memoranda  are  made  wider  to  reach  over 
the  last  column.  "When  an  amount  is  written  in  the  last  column  of  the 
invoice,  it  manifolds  in  the  proper  column  of  the  sales  sheet.  The 
same  is  true  of  an  amount  written  in  the  last  column  of  a  credit  memo. 

This  subdivision  of  columns  is  carried  a  step  further  to  permit 
of  the  analyzation  of  sales  in  several  ways. 

According  to  classes  of  goods,  as  follows: 


Date 


Description 


jV 

Total 

1  Hay 

1 

Grain 

Coal 

Lime 

1 

Misc. 


260 


3ALES  Journal 


DELSCRIPTION 


V 


A-L 


M-Z 


John  Jones  &  Co. 
Baltimore,  Md- 

30  days  net 

doz-  Mens'  Calf  shoes 


k.   B.  Madigan  &  Co. 
Beading,  Pa. 

^  10  days 

pre.  Chi.  ehoee 


1  50  18  00 

2  00   12  00 

30  00 


98   18  00 
1  00   18  00 


30  00 


TOTAL 


lig.    I  I.     Siiles  Journal  Arr.aiiKed  for  JJistribution  to  Two  Ledgers 

261 


18  BlLLIXd  AND  OUDEH  RFXORDING 

According  to  territory,  as  follows: 


Date 


Description 


V 


Total':     City 


Country 


Foreign 


Special 


Accordino;  to  salesmen,  as  follows: 


Date     i      Description       v/ 


Total 


D. Jones 


A.  Dick    B.Carter 


L.  Piper 


To  separate  the  sale  of  regular  goods  from  goods  which  are  being 
sold  on  consignment,  as  follows: 


Date 

Description 

v/ 

Total , 

Regular 

Consig't  No.  1 

No.  2 

- 

- 

Generally  the  invoice  is  wide  enough  to  reach  over  the  total 
column  only,  as  shown  in  Fig.  12.  Therefore,  a  total  amount  written 
in  the  total  colunm  of  the  invoice  will  manifold  onto  the  sales  sheet, 
and  in  the  column  marked  Total. 

A  wide-carriage  billing  machine,  if  used,  can  be  adjusted  with 
tabulator  stops  to  jump  to  any  column  desired.  The  total  amount 
is  then  written  therein  a  second  time.  The  amount  of  the  total 
column  should  always  equal  the  total  of  all  the  columns  placed  to  the 
right  of  the  total  column.  This  plan  eliminates  the  old  way  of  wait- 
ing until  the  end  of  the  month,  and  then  laboriously  going  over  the 


262 


BILLING  AND  ORDER  RECORDING 


19 


sales  book  with  one  total  column  only,  and  picking  out  the  various 
items  according  to  the  classification  wanted. 

The  work   should   he  planned    in  a  manner  which  permits  of 


LANDERS.   FRARV  &  CLARK.  HARDWARE  SALGS       M-R  597 


3         tot     EcUher  Hr.: 
1        C'nly  Cftko  Kcifo 


EQt*-»r  K.-1S  7i&l 


"1 


^^S^£''^--^: 


Fiff.  12.      l,(jo^r  1,1  ;,[  .Sales  Sheet,  and  Invoices  witli  Columns  for  Distribution  of 
Labor  and  Slock 

each  day's  work  being  finished  each  day — leaving  nothing  (o  aeeumu- 
late  until  the  end  of  the  mcmth,  necessitating  the  retracing  of  .steps 
to  secure  certain  statistical  information. 

In  certain  lines  of  business  it  is  desirable  to  make  two  sales  sheets, 


263 


20  HILLINC  AND  OUDKl^  UK('()1U)1N(] 

one  of  \vlik'h  is  ivtaiiUMl  in  a  binder  for  an  ()ffic(>  record  and  the  other 
is  used  for  various  purposes.  It  can  he  used  as  record  of  sales  from 
ii  branch  to  a  liome  office,  each  page  being  numbered  in  (hij)licate, 
and  of  a  distinctive  cok)r.  This  is  the  plan  used  all  over  the  world  by 
the  Standard  Oil  Company.  As  the  sales  sheets  arrive  at  the  home 
office,  they  are  placed  in  their  respective  binders  and  are  gradually 
made  into  a  built-up  book.  The  loss  of  a  sheet  would  be  instantly 
detected  by  the  missing  page  number. 

A  large  French  perfumery  firm  in  New  York  pursues  this  plan, 
and  sends  to  Paris  the  duplicate  sales  sheet  on  thin  paper.  It  gives 
the  home  office  a  fine  record  of  every  invoice  sent  out  to  any  customer 
by  the  branch  office  or  warehouse.  As  several  invoices  can  be  mani- 
folded on  each  page,  and  on  both  sides  of  the  sheet,  it  is  the  most 
economical  method  of  billing  as  far  as  stationery  is  involved.  The 
name  condensed  hilling  indicates  this  fact. 

In  other  instances,  the  duplicate  sales  sheet  is  wide  enough 
only  to  allow  quantity  and  description  of  goods  to  be  manifolded 
thereon,  prices  and  extensions  not  showing.  This  narrow  sheet  can 
be  used  for  posting  to  the  stock  records  without  disclosing  to  that 
department  the  prices  at  which  the  particular  goods  have  been  sold. 
This  form  of  the  sales  sheet  is  shown  in  Fig  13. 

Duplicate  Invoices.  There  are  many  reasons,  in  various  lines, 
why  duplicate  invoices  are  desirable  and  even  necessary.  Some 
customers  request  invoices  rendered  in  duplicate  with  one  copy 
complete,  the  other  minus  the  prices  and  extensions.  To  accom- 
plish this,  it  is  either  necessary  to  place  a  piece  of  paper  between  the 
carbon  and  duplicate  invoice  in  such  a  manner  that  the  prices  and 
extensions  will  not  copy,  or  to  use  a  short  invoice  cut  off  at  the  left  of 
the  price  column,  or  to  use  a  short  piece  of  carbon  paper  between 
the  original  and  second,  or  duplicate,  invoice. 

It  is  desirable  to  make  extra  copies  of  invoices  or  duplicates  for 
the  use  of  various  departments  of  a,  business,  for  instance,  analysis 
of  sales  by  salesmen.  Where  a  company  employs  a  large  number 
of  salesmen,  it  is  very  convenient  to  file  in  binders  a  duplicate  copy  of 
all  invoices  sold  by  each  salesman,  using  a  binder  for  each  salesman. 
This  is  preferable  to  having  separate  columns  in  the  sales  book  (sales 
sheets  in  binders).  The  latter  method  permits  each  salesman  to  see 
what  every  other  salesman  is  doing. 

264 


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265 


22  BlLl.lNd  AND  OUDKR  RKCORDING 

Department  Records.  A  separate  biiulcr  allows  each  man  to 
c'oiisiill  his  rt'cord  without  inconvonience  to  any  other  one.  In  large 
companies  Inning  a  traffic  department,  it  is  necessary  to  provide  a 
duplicate  copy  of  each  invoice  for  the  record,  showing  complete 
details  of  every  charge. 

A  distinction  should  be  made  between  those  firms  who  make 
their  invoices  before  the  goods  are  shipped,  and  those  who  make  the 
invoices  after  the  goods  have  been  shipped.  In  the  cloak  business, 
for  instance,  the  goods  are  generally  billed  before  the  goods  are 
shipped,  the  invoice  being  placed  in  an  envelope  and  packed  with 
the  goods. 

Oftimes  the  goods  are  manufactured  in  proper  quantities, 
properly  checked  from  the  order  to  the  packers'  table,  and  then 
packed  improperly — some  customer  receiving  too  many  garments,  an- 
other, too  few.  Yet  the  order  will  be  properly  checked.  To  obviate 
this  difficulty,  a  scheme  was  devised  whereby  the  packer  received  a 
duplicate  typewritten  copy  of  the  bill  (or  invoice)  showing  every- 
thing but  the  quantities.  This  makes  it  necessary  for  the  packer  to 
count  all  the  garments  and  mark  down  in  pencil  on  this  copy  of  the 
bill  the  quantity  of  each  style  and  kind  to  be  shipped.  Before  the, 
goods  are  shipped,  the  packer's  copy  of  the  invoice,  with  his  quantities 
marked  in  lead  pencil,  is  compared  with  the  quantities  charged  on 
the  sales  sheet.  This  scheme  forces  the  packer  to  count  all  garments 
instead  of  double  checking  someone  else's  figures  in  an  absent-minded, 
or  even  neglectful,  way. 

This  is  accomplished  by  placing  a  narrow  strip  of  paper  over 
the  quantity  column  of  the  duplicate  invoice,  but  under  the  carbon 
paper.  The  quantity  figures  manifold  onto  the  strip  of  paper  in- 
stead of  onto  the  duplicate  invoice.  This  plan  is  termed  using  a  blind. 
The  narrow  strip  of  paper  between  the  invoice  and  duplicate  is  the 
blind  dcvScribed  a  little  further  on. 

The  next  step  in  short  cutting  work  is  the  printing  of  a  label 
in  connection  with  the  invoice  and  sales  sheet.  In  the  book  business, 
where  it  is  generally  possilile  to  fill  orders  from  stock,  and-where  the 
invoice  can  be  made  before  tlie  goods  are  shipped,  It  is  possible  to  place 
a  small  piece  of  paper  (the  label)  between  a  folded  invoice  in  such  a 
manner  that  when  the  name  is  written  on  the  invoice  it  manifolds 
onto,  the  label  as  well  as  onto  the  duplicate  invoice  and  sales  sheet. 

266 


BILLING  AND  ORDER  RECORDING 


23 


Analysis  of  Quantities  and  Amounts-  In  certain  lines  of  business 
which  sell  three  or  four  varieties  of  goods,  it  is  desirable  to  analyze 
the  weights  or  quantities  in  the  proper  columns,  which  in  turn  mani- 
fold onto  the  sales  sheets,  as  shown  in  Fig.  14. 


BRA5S  RODS 


BRASS   BARS 


COPPELR  BARS 


Z I MC     BARS 


2500 


lOOO 


\o 


@20 

©)  15 


«  60.00 
«  52  OO 
«  i  5.00 


3000  #  Brass  Rods 
2.500  #  Brass  Bars 
1000  #  Zinc  Bars 


Fig.  14.     Sales  Sheet  for  Analyzing  Quantities  and  Amounts  of  Goods 

This  saves  a  great  deal  of  time  as  compared  with  making  out 
the  same  invoice  in  the  following  way: 

@20  $00.00 
@21  $52.50 
@15     $15.00 

By  following  the  first  plan,  all  of  the  weights  for  the  respective 
classes  of  goods  will  be  manifolded  into  the  proper  columns,  and  it  is 
therefore  an  easy  matter  to  total  each  column,  and  at  the  end  of  the 
month  the  classification  of  sales  will  be  totaled  according  to  wei<fhts 
as  well  as  according  to  dollars  and  cents.  The  invoice  is  ruled  to 
match  the  sales  slieet. 

Information  on  Sales  Sheet  Not  on  Invoice.  In  certain  lines  of 
business,  such  as  wire-screen  manufacture,  it  is  desirable  at  times 
to  .substitute  (lie  ne.xt  size  of  wire  in  order  to  (ill  orders  j)romptly. 
In  such  cases,  it  is  necessary  to  have  the  invoice  show  tlie  si/,e  of  wire 
ordered,  but  to  have  the  sales  sheet  show  the  size  really  .sent.  It 
would  .seem  impo.ssible  therefore  to  write  No.  S  quire  on  the  invoice 
and  have  No.  0  tvlrc  manifold  on  the  .sales  .sheet. 


2()7 


■2\  lUl.LINC  A\n  ORDER  RECORDIXG 

The  idea  iisrd  to  accomplish  tlic  lU'siivd  result  is  to  })lacc  the 
invoice  in  such  a  position  with  relation  to  the  sales  sheet  that  a  margin 
is  left  on  the  li'ft-hand  side  of  the  sales  sheet,  which  would  permit 
the  operator  typewritintj  directly  on  the  sales  sheet,  and  placing 
thereon  the  actual  size  of  the  wire  shipped.  The  size  ordered  would 
lie  written  on  the  invoice  in  the  regular  manner,  and  of  course  would 
manifold  onto  the  sales  sheet. 

There  are  other  cases  where  it  is  desirable  to  use  this  idea. 
For  instance,  wholesale  dry  goods  firms  when  ])ureliasing  dry  goods 
from  eastern  manufacturers  request  the  latter  when  hilling  to  use 
lot  numbers  furnished  by  the  purchaser.  It  is  also  necessary  for 
the  manufacturers  to  bill  the  goods  according  to  their  own  lot  num- 
bers. Hence  it  becomes  necessary  to  have  both  the  customer's  lot 
number  and  their  own  on  the  sales  sheet.  This  is  accomplished 
by  writing  their  own  lot  numbers  directly  upon  the  sales  sheets  at 
the  left  of  the  invoice  and  then  making  the  invoice  out  in  the  regular 
way.  This  idea  carries  out  the  customer's  wishes,  and  always  gives 
a  comparison  of  lot  numbers  to  the  manufacturers  on  their  sales 
sheets.     Flat-bed  machines  require  wider  invoice,  Fig.  15. 

Goods  Purchased  Outside.  It  is  possible  to  make  a  short  cut  in 
some  lines  of  business  where  the  goods  sold  are  not  kept  in  stock  but 
are  purchased  from  other  firms  in  the  same  city.  AMien  placing  the 
invoice  in  the  billing  machine  over  the  sales  sheet,  requisition  blanks 
in  duplicate  or  triplicate  can  also  be  placed  in  the  machine  with  the 
invoice,  and  the  items  which  have  to  be  ordered  outside  written  first 
on  the  invoice.  When  all  of  these  items  have  been  entered  on  the 
invoice,  the  requisition  blanks  may  be  removed,  and  the  invoice 
and  sales  sheet  left  in  the  billing  machine,  putting  the  remaining 
items  which  are  to  be  shipped  and  charged  on  the  invoice  (sales 
sheet).     This  occurs  where  orders  can  be  shipped  complete. 

Tiiis  plan  can  also  be  used  when  writing  up  the  order,  where  the 
billing  is  done  after  the  goods  are  shipped.  It  is  to  be  remembered 
that  there  is  a  great  distinction  to  be  made  in  handling  the  billing 
work  of  firms  who  are  a))le  to  fill  their  own  orders  complete,  as  con- 
trasted with  those  fiiuns  ^\ho  have  to  wait  until  goods  are  shipped 
in  order  to  determine  which  items  to  bill.  Some  firms  who  always 
carry  a  complete  stock  are  able  to  make  up  an  invoice  and  order 
blank,  a  label  for  the  express  package,  and  a  charge  on  the  sales  sheet, 

268 


FiK.  15.     Forms  to  I'rovide  on  Sales  Slioct  Informatioii  ikjI  mi  ln\oi((> 

269 


J(l  lUTJJXG  AND  ORDER  RF/'ORDTXr, 

siimill;iii(M)iisly,  In-causo  tlicy  kiunv  tliat  tlioy  can  ship  every  item 
ealled  t'ltr,  and  consecjueiitly  do  not  luivo  to  wait  to  see  what  item^j 
are  sliippcd  Ix-t'ore  hilling  them. 

I'nit  Billing.  The  unit  idea  in  hilling  has  grown  considerahly 
in  the  last  few  years,  notwithstanding  that  the  size  of  the  bills  have 
to  be  uniform,  and  as  large  an  invoiee  has  to  be  used  for  one  item 
as  for  a  large  bill.  Many  firms  prefer  the  unit  idea  to  the  condensed 
sales  sheet  idea. 

This  is  due  chiefly  to  the  elasticity  of  the  scheme.  The  duplicate, 
triplicate,  or  quadruplicate  of  the  invoice  can  be  sorted  in  any  desir- 
able way.  It  is  especially  convenient  for  bookkeepers  to  sort  dupli- 
cates of  the  invoices  alphabetically,  and  save  a  great  deal  of  time  in 
posting  to  loose-leaf  ledgers  arranged  alphabetically,  in  the  same 
manner.  (In  mentioning  loose-leaf  ledgers,  card-ledgers  are  always 
included,  as  the  same  principles  are  applied  to  one  as  to  the  other,  as 
far  as  accounting  methods  are  concerned.)  It  is  easier  to  handle 
unit  l)illing  forms  on  the  typewriters  with  billing  attachments,  which 
is  an  added  reason  that  many  firms  prefer  to  use  them.  Some  of 
these  forms  are  shown  in  Fig.  IG. 

Another  idea  to  be  recommended  is  the  color  scheme,  whereby 
each  copy  of  the  invoice  is  manifolded  onto  a  different-colored  piece 
of  paper.  In  sorting  the  various  copies  for  different  departments, 
different  colors  will  greatly  facilitate  the  recognition  of  various  sheets, 
and  the  uses  or  departments  for  which  each  is  intended. 

ORDER  WORK  OF  WHOLESALE  GROCERS 

There  are  hardly  two  firms  who  handle  their  order  work  alike. 
The  first  consideration  in  treating  order  methods  is  to  distinguish 
the  classes  of  business  in  which  the  orders  are  made  up  ready  for  ex- 
ecution by  the  salesman,  from  those  which  are  received  from  custom- 
ers and  transcribed  on  typewriters.  The  first  class  will  be  discussed 
separately  from  the  second. 

\Miolesale  grocers,  druggists,  and  similar  Imes  receive  the  great 
majority  of  their  orders  from  the  salesmen  in  the  field.  After  the 
orders  are  opened,  the  first  step  is  to  stamp  on  each  order  a  number 
with  an  automatic  numbering  machine.  After  this  is  done  they  are 
copied  into  an  order  register  as  follows: 

270 


Fig. 


IG.     Samples  of  Unit  Billing.      Remington  Typewriter  Co. 


271 


2S  BILLINTt  AXO  order  RErORDTNG 

1012  John  Smith  &  Co.,  Plainficld,  N.  3.^ 

1013  A.  B.  Jones  ct  Bro.,  rrovi.lencr,  R.  I. 

1014  U.  J.  Benedict,  Elmira,  N.  Y. 

1015  Grace  Barnes  &  Co.,  Alliance,  Ohio. 

After  the  orders  are  filled  and  charged,  they  are  checked  on  the 
order  register.  About  once  a  week  all  of  the  unchecked  numbers 
on  the  order  register  are  compared  with  the  unfilled  orders.  If  an 
order  should  become  lost,  the  fact  w^ould  not  remain  unknown  longer 
than  one  week's  time. 

It  should  always  be  remembered  that  in  case  an  order  is  not 
completely  filled  and  is  "back  ordered,"  the  back  order  should 
always  show  the  original  order  number  in  order  to  prevent  confu- 
sion. A  little  practical  experience  will  quickly  show  how  wrong  it  is 
to  use  a  new  number  for  a  back  order. 

Back  Orders.  In  the  problem  of  systematizing  any  kind  of 
business,  the  question  of  back  orders  and  the  proper  method  of 
handling  them  is  one  of  the  most  troublesome.  Some  firms  do  not 
wish  an  order  blank  returned  to  the  warerooms  after  it  has  once 
been  there,  because  they  do  not  wish  the  wareroom  or  factory  to 
know  the  prices  which  are  placed  on  order  blanks  in  the  office  after 
they  have  been  received  there  for  pricing,  extending,  and  billing. 
Many  firms  therefore  make  an  entirely  new  order  to  be  returned 
to  the  factory  or  wareroom  with  the  letter  A  used  in  connection 
with  the  order  number,  as  follows:  1013 A.  This  of  course  delays  the 
filling  of  the  order  until  the  back  order  is  typewritten.  If  it  is 
necessary  to  make  a  second  back  order,  the  same  would  read  1013B. 
Other  firms  use  the  color  scheme.  This  is  a  very  good  idea,  as  it 
indicates  clearly  to  the  order  fillers  old  orders  which  should  receive 
attention  first. 

Many  important  improvements  in  the  order  and  billing  methods 
have  been  inaugurated  in  recent  years  in  the  business  of  wholesale 
grocers.  Formerly  it  was  the  custom,  after  the  order  had  been  num- 
bered and  recorded  in  the  order  register,  to  pass  the  orders  out  into 
the  warehouse  with  the  general  understanding  that  they  were  to 
be  filled  as  quickly  as  possible.  The  order  fillers  would  generally 
start  at  the  top  floor  and  pick  all  of  the  items  which  were  to  be  shipped, 
place  them  on  a  truck  and  take  them  to  the  next  lower  floor,  and 
follow  this  plan  until  the  order  was  entirely  filled.  In  stores  above  a 
certain  size  this  resulted  in  considerable  delay. 


272 


BILLING  AND  ORDER  RECORDING  29 

The  first  improvement  was  to  send  the  orders  to  the  shipping 
department,  where  they  were  spHt  up  by  clerks  known  as  Slippers, 
who  wrote  on  slips  the  items  which  were  to  be  taken  out  of  stock, 
each  slip  representing  the  goods  to  be  gotten  out  on  a  certain  order 
from  a  certain  floor.  This  idea  allowed  the  order  fillers  on  all 
floors  to  work  simultaneously,  and  resulted  in  considerable  saving 
of  time. 

Another  favorable  result  obtained  through  this  system  is  that 
the  shipping  clerk  retains  an  original  copy  of  the  order  (the  copy  sent 
in  by  the  salesman)  and  is  enabled  therefore  to  follow  up  all  depart- 
ments and  hurry  up  any  department  which  may  be  delinquent  in 
the  filling  of  a  certain  order.  In  planning  work,  it  is  always  advisable 
to  have  one  department  act  as  a  follow-up  on  some  other  department. 
In  the  grocery  business,  it  is  much  more  satisfactory  for  the  shipping 
clerk  to  have  a  complete,  record  of  all  the  orders  to  be  shipped  that 
day,  than  to  hand  the  original  orders  into  the  warehouse  to  be  sent 
down  to  the  shipping  department  after  the  order  has  been  entirely 
filled,  and  then  have  the  shipping  clerk  rushed  at  the  last  miniUe 
to  plan  his  loads  and  do  all  of  the  clerical  work,  such  as  making  up 
bills  of  lading,  etc. 

The  next  improvement  was  necessitated  by  a  desire  on  the  part  of 
those  wholesale  groceries  which  are  located  in  cities  having  an  efficient 
interurban  electric  car  service  to  fill  orders  at  different  hours  of 
the  day.  One  western  firm  transcribed  all  of  its  orders  on 
cylinder  billing  machines,  giving  the  shipping  clerk  a  full  copy  of 
the  order,  and  each  department  a  copy  of  the  items  which  are  to  b^ 
filled  from  that  department  only.  On  the  shipping  clerk's  copy,  the 
notation  11  A.  M.,  is  marked,  also  on  all  of  the  department  order 
slips.  This  indicates  that  the  order  is  to  be  shipped  on  the  11  o'clock 
car.  Other  stationery  is  printed  with  the  1  P.  M.,  2  P.  M.,  3  P. 
M.,  4  P.  M..  5  P.  M.  to  indicate  th<'  hours  at  which  the  orders 
are  to  be  shipped.  ]Many  small  retail  merchants  delay  ordering 
until  the  last  minute,  and  the  wholesale  house  which  can  give  the 
[)romptest  service  gets  the  business.  Tlie  above  plan  advises  the 
shipping  department  the  time  that  the  goods  are  to  be  deHver(>d, 
and  makes  it  responsible  for  results.  All  delays  are  noted,  and  a 
daily  report  made  of  the  causes,  which  are  promptly  investigated 
and  removed. 


273 


30  BILLING  AND  ORDER  RECORDING 

Split  Orders.  Soinr  wholosulc  drug  houses  liave  their  stock 
arranged  on  ditYerent  floors,  of  which  their  salesmen  are  fully  ad- 
vised. If  the  salesman  takes  an  order  for  goods  which  are  held  in 
stock  on  four  different  floors,  lie  sends  in  the  order  on  four  sheets 
of  ])a})er  with  the  items  for  each  floor  written  on  the  respective 
sheets  which  indicate  the  respective  floors.  Different-colored  sheets 
of  pajicr  are  used  for  the  various  floors.  This  scheme  puts  more 
clerical  work  on  the  salesmen,  but  it  enables  the  office  to  quickly 
hand  each  department  its  part  of  the  order  without  the  delay  of 
transcribing  the  department  slips  on  the  typewriter  at  the  office. 
In  all  order  schemes  where  an  order  is  split  up  and  written  on  several 
sheets  of  paper  in  order  that  each  department  may  fill  the  order 
without  delay,  the  term  split  orders  is  used.  In  all  split-order  schemes, 
the  number  of  sheets  in  which  the  order  has  been  divided  is  written 
on  each  sheet.  For  instance,  if  there  are  departmental  order  sheets 
for  three  different  floors,  the  figure  3  is  marked  on  each  slip.  In 
this  way  the  biller,  by  counting  the  number  of  sheets  attached  to  the 
complete  order,  will  know  that  all  of  the  split-order  sheets  have  been 
returned  to  the  office.  Fig.  17  illustrates  this  system  of  orders.  The 
three  blank  sheets  at  the  top  are  departmental  order  sheets,  and  each 
contains  only  a  part  of  the  whole  order.  This  is  accomplished  by 
removing  one  departmental  sheet  at  a  time  from  the  billing  machine, 
but  allowing  the  three  top  sheets  to  remain  in  the  machine  until  the 
entire  order  is  written. 

Some  firms  are  willing  to  make  four  copies  of  an  order,  each 
copy  containing  all  of  the  items  of  an  order.  Other  firms  do  not 
wish  the  employes  to  know  what  a  customer  is  buying  outside  of 
the  goods  relating  to  the  department  in  which  the  employe  is  work- 
ing. Further,  sometimes  two  departments  in  the  same  factory  are 
equipped  to  make  the  same  class  of  goods,  and  if  each  department 
received  a  complete  copy  of  the  order  there  might  be  some  confusion 
and  duplication  in  the  filling  of  the  order. 

Some  firms,  instead  of  making  split  orders,  make  a  summary 
of  the  goods  to  be  delivered  from  each  floor,  giving  each  floor  several 
of  these  summaries  in  the  course  of  a  day.  The  goods  are  delivered 
tg  the  shipping  department  in  large  cpantities,  and  are  separated 
by  the  shipping  clerk  according  to  the  quantities  wanted  for  each 
order.     Concerns  which  are  using  this  idea  claim  that  it  takes  less 

27i 


PMk.  17.      Kornis  for  Split -Orilcr  Scliemes 
275 


32  BILLING  AND  ORDER  RECORDING 

tinu'  for  the  .sliij)jH'r  (o  sopa rate  floods  than  it  dcnvs  for  the  order  depart- 
ment to  make  split  orders  for  each  individual. 

In  planning  the  clerical  work  in  order  hilling  and  shipping 
methods,  the  volume  of  business  being  handled  must  be  taken  into 
consideration.  A  plan  which  is  necessary  with  a  large  business  would 
be  considered  as  red  tape  in  a  smaller  one.  The  larger  a  business 
grows,  the  more  it  is  possible  to  "specialize"  the  work. 

In  a  very  small  business,  one  man  could  fill  all  the  orders  and 
make  out  all  of  the  bills.  In  a  little  larger  business  it  would  be 
necessary  to  devote  one  person's  entire  time  to  filling  orders,  another's 
to  making  out  the  bills.  In  a  business  twice  as  large  as  the  one  just 
mentioned,  it  would  be  necessary  for  one  person  to  devote  his  entire 
time  to  filling  the  orders  from  one  floor  only.  In  an  exceptionally 
large  business,  it  might  be  necessary  for. one  person  to  devote  his 
entire  time  to  filling  orders  for  some  particular  class  of  goods  on  one 
floor.  These  examples  are  given  to  illustrate  the  meaning  of  the 
word  specializing. 

Simple  Order  Form.  The  majority  of  firms  transcribe  their 
customers'  orders  onto  their  own  order  forms  from  letters  or  re- 
quisitions. The  simplest  form  of  order  is  one  containing  an  original 
for  use  of  the  warehouse  or  factory,  a  duplicate  to  be  mailed  to  the 
customer  as  an  acknowledgment  of  the  order,  and  a  third  copy 
which  is  held  in  the  office  as  a  record  of  unfilled  orders.  The  re' 
quisition  form  illustrated  in  Fig.  18  conveys  the  idea. 

The  practice  of  sending  an  exact  copy  of  the  order  to  the  cus- 
tomer eliminates  the  necessity  of  acknowledging  the  order  by  letter, 
and  gives  the  customer  an  opportimity  of  checking  over  the  order 
as  entered.  It  is  customary  to  print  on  acknowledgment  of  order 
forms  the  sentence:  This  is  an  exact  copy  of  the  order  as  entered — 
if  any  errors  are  noted  kindly  advise  us  at  once.  One  firm  in 
Buffalo  saved  $300.00  the  first  week  they  installed  this  scheme, 
through  the  detection  of  an  error  by  the  customer. 

It  is  imperative  that  before  a  remedy  or  short-cut  methods 
can  be  prescribed,  it  is  necessary  to  thoroughly  diagnose  all  of  the 
conditions  incident  to  the  business.  It  should  also  be  remembered 
that  clerks  and  even  department  heads  will  see  all  of  the  imaginary 
difficulties  of  a  new  idea  and  overlook  all  of  the  benefits  to  be  derived 
therefrom.     It  should  be  further  remembered  that  if  a  new  method 


276 


BILLING  AND  ORDER  RECORDING 


33 


\/'' 


Fig.  Is.     Siinplti  Jieqiii.sition  Korins  for  Order  llmiilliu^.      litnunylon  J'l/iJewrilcr  Co. 
^  277 


34  BILLING  AND  ORDER  RECORDING 

shortens  nine-tenths  of  any  particular  class  of  work  and  slightly  in- 
creases one-tenth,  the  party  involved  will  many  times  fail  to  see  the 
net  advantages  accruing  through  the  introduction  of  the  new  idea. 
If  objections  are  raised  to  a  suggested  short-cut  method  it  is  always 
well  to  ascertain  whether  the  oV)jections  apply  to  a  majority  of  the 
work  or  a  portion  of  it  only.  Most  people  in  clerical  positions  rather 
resent  new  ideas,  and  seem  to  take  a  pleasure  in  trying  to  find  some 
reason  why  a  new  idea  will  not  succeed.  This  is  one  phase  of  human 
nature  which  requires  the  utmost  tact  and  diplomacy  to  handle 
successfully.  In  advancing  or  suggesting  new  methods,  it  should 
be  assumed  as  far  as  possible,  that  the  idea  has  been  suggested  by 
the  person  to  whom  one  is  talking,  for  the  reason  that  most  people 
are  willing  to  "father"  their  own  ideas. 

Simple  Order  Form  with  Copy  for  Shipping  Department.  The 
second  short  cut  which  was  instituted  in  connection  with  order  forms 
was  the  addition  of  a  sheet  on  which  was  manifolded  a  copy  of  the 
order  for  the  shipping  department. 

The  idea  is  to  give  the  shipper  information  in  advance,  in  order 
that  he  may  prepare  his  bills  of  lading  and  plan  his  work  for  his 
teams,  order  cars  in  advance  from  the  railroad,  call  up  express  com- 
panies, and  such  other  work  as  might  be  necessary  to  the  proper 
shipment  and  delivery  of  the  goods  manufactured  and  sold,  and  to 
file  the  copy  as  his  permanent  record,  in  some  cases. 

Some  firms  desire  to  prevent  the  shipper  from  knowing  the 
prices  at  which  their  goods  are  sold.  This  is  accomplished  by  using 
for  the  shipping  department  a  short  sheet  of  paper  which  reaches 
from  the  left  edge  of  the  order-blank  to  the  price  column  only.  An- 
other method  is  to  use  a  narrow  sheet  of  carbon  paper  with  a  full- 
size  sheet  of  paper.  This  plan  is  not  as  satisfactory  as  the  former 
one,  as  the  carbon  paper  sometimes  slips  to  the  right  and  allows  the 
prices  to  manifold. 

Acknowledgment  of  Order  to  Salesman.  In  some  lines  of  busi- 
ness, it  is  desirable  to  add  an  additional  sheet  which  is  termed  acknowl- 
edgment of  order  to  salesman.  This  plan  enables  the  salesman  to 
know  that  the  order  has  been  received  and  properly  entered  for 
execution  (in  manufacturing  lines  it  is  necessary  to  transcribe  orders 
on  order  forms  which  contain  too  many  copies  for  a  salesman  to 
manifold  by  pencil),  and  gives  him  the  opportunity  of  checking  the 

.278 


BILLING  AND  ORDER  RECORDING  35 

order  as  entered.  It  should  be  remembered  that  in  some  lines  of 
business  there  is  such  an  enormous  amount  of  detailed  information 
in  connection  with  an  order  that  neither  the  customer  nor  a  salesman 
would  check  over  an  exact  copy  of  the  order  as  entered.  This  should 
always  be  taken  into  consideration  when  considering  the  addition 
of  this  sheet. 

STATIONERY 

The  various  styles  of  loose-leaf  sheets  and  binders  should  be 
fully  understood  in  order  to  appreciate  their  importance  in  order  and 
billing  work. 

Loose=Leaf  Sheets.  The  first  loose-leaf  sheets  were  punched 
with  closed  holes,  as  shown  in  the  illustration  of  Kilby  Mfg.  Company 
forms  in  Fig.  18.  The  trouble  with  the  closed-hole  punching  Is  that, 
when  placed  over  the  metal  posts  of  the  binder,  it  is  impossible  to 
remove  a  sheet  in  the  center  of  the  binder  without  removing  all  of 
the  sheets  immediately  above  the  one  desired. 

To  obviate  this  difficulty,  the  slotted  hole  was  devised.  This  is 
illustrated  in  the  forms  of  the  Commercial  Sash  &  Door  Company, 
in  Fig.  19.  The  slot  from  the  edge  of  the  paper  to  the  punched  hole 
permits  the  paper  to  be  placed  over  the  posts  of  the  binder  between 
any  two  sheets.  Holes  are  punched  in  both  the  closed  and  slotted 
styles  in  various  sizes,  ranging  generally  from  a  |  to  -f^  of  an  inch 
in  diameter.  In  late  years,  manufacturers  have  introduced  punched 
holes  of  different  shapes  from  that  of  a  circle. 

For  permanent  records  where  the  sheets  are  filed  serially  accord- 
ing to  page  number,  order  number,  etc.,  the  closed-hole  loose-leaf 
sheet  is  perfectly  satisfactory.  For  records  which  are  to  ])e  rcMUOved 
from  any  given  part  of  the  l)iii(l('r  and  reinserted  in  another  part, 
the  slotted-hole  loose-leaf  sheet  is  the  most  satisfactory  style  to  use. 

Binders.  Binders  are  generally  made  of  two  covers  and  a  set 
of  posts,  which  ordinarily  are  attached  to  one  of  the  covers.  The 
other  cover  is  movable  in  order  to  accommodate  the  increased  thick- 
ness of  the  binder  as  loose-leaf  sheets  are  added,  (ireat  strides  iiave 
been  made  in  the  manufacture  of  inij)roved  l)inders.  There  are  so 
many  styles  of  j)osts  and  other  ingenious  arrangements,  where  the 
two  covers  are  held  together  and  closed  or  opened  by  the  use  of  a 
key,  that  only  reference  to  catalogs  of  mainifacturers  will  supply 
detailed  information. 


279 


Via.  19.     Two  Styles  of  Punching  for  Loose-Leaf  Slieets.      Remington  Typewriter  Cu. 


280 


BILLING  AXD  ORDER  RECORDING  37 

In  buying  binders  and  loose-leaf  sheets,  it  is  well  to  buy  both  of 
the  same  firm.  Heretofore,  trouble  has  been  experienced  where 
the  punched  holes  of  the  loose-leaf  sheets  were  probably  ^V  ^'^^"^^ 
further  apart  or  closer  together  than  the  metal  posts  in  the  binder 
in  which  they  were  to  be  used.  The  manufacturer  of  the  binders 
will  always  claim  that  the  sheets  were  punched  incorrectly  by  the 
printer,  and  vice  versd. 

It  is  pretty  generally  understood  now  that  all  punched  holes 
should  be  placed  with  the  center  of  the  hole  h  in.  from  the  edge  of 
the  paper.  This  allows  enough  margin  to  permit  of  the  paper  being 
held  firmly  over  the  posts.  In  all  cases  where  the  holes  are  punched 
too  near  the  edge  of  the  paper,  the  narrow  margin  between  the  edge 
•of  the  paper  and  the  hole  becomes  torn  very  quickly. 

Stationery  Printed  for  Typewritten  Work.  Very  few  people 
recognize  the  great  value  of  properly  designed  stationery  for  type- 
written work.  The  law  of  usage  and  custom  is  so  strong  that 
invariably  invoices  and  order  forms  are  printed  the  same  as  if  they 
were  to  be  hand-written.  The  headings  are  printed  with  the  first 
letter  of  each  word  lined  up  vertically.  This  plan  causes  great 
waste  of  time  on  the  part  of  an  operator. 

All  billing  and  order  work  should  be  done  on  machines  equipped 
either  with  a  column  stop  or  a  decimal  tabulator.  A  column  stop 
is  a  device  on  a  writing  machine  which  automatically  stops  the  car- 
riage at  any  one  of  several  predetermined  points.  A  decimal  tabu- 
lator is  a  device  on  a  writing  machine  which  automatically  stops 
the  carriage  at  the  units,  tens,  hundreds,  etc.  place  in  any  prede- 
termined column. 

It  should  also  be  understood  that  all  typewriters  and  billing 
machines  are  equipped  with  marginal  stops.  These  stops  arc  ad- 
justable, and  can  be  arranged  on  either  side  of  the  machine  in  such 
a  manner  that  the  carriage  will  always  stop  at  any  given  point  at 
either  edge  of  the  paper. 

It  is  vitally  important  that  either  a  column  stop  or  a  decimal 
tabulator  should  be  used  in  connection  with  marginal  stops  on  writ- 
ing machines,  and  these  three  points  should  be  taken  into  considera- 
tion when  designing  stationery  for  use  with  a  machine.  The  fol- 
lowing illustrations  show  poorly  designed  and  correct  invoice 
headings. 

281 


3.S  HTTJJXr^  .VXD  OnDF.R  RErORDTXO 

J.  B.  WILLIAMS  &  BRO. 
NASSAU,  N.  Y. 

NAME  SALESMAN  , 

SIIIPPINd  ADDRESS  ORDER  NUMBER 

P.  O.  ADDRESS  REQUISmON  NUMBER 

VLV 

This  blank  form  has  purposely  been  shown  in  order  to  con- 
trast it  with  an  invoir(>  ])nnte(l  in  the  same  wav  with  the  iiea(lini>s 
properly  filled  in. 

J.  B.  WILLIAMS  &  BRO. 

NASSAU,  N.  Y. 
NAME,  Geo.  Brown  &  Co.  SALESMAN,  Jenkim^ 

SHIPPING  ADDRESS,  Flat  Rock,  W.  Va.    ORDER  NUMBER  3246 
P.  O.  ADDRESS,  Wenonah,  W.  Va.  REQUISITION  NUMBER  A341 

VIA  A'.  &  M\  R.  R.  Co.  OUR  ORDER  NUMBER  9422 

Contrast  this  heading  with  that  of  an  invoice  which  has  the  last 

letters  of  each  line  lined  up  vertically.    This  makes  it  possible  for  the 

.operator  of  the  billing  machine  to  draw  the  carriage  to  the  extreme 

right,  as   the  first  letter  to  be  written  in  every  line  of  the  heading 

starts  at  the  same  point. 

NAME  Geo.  Brown  &  Co.  SALESMAN  Jenkins 

SHIPPING  ADDRESS  Flat  Rock,  W  Va.  ORDER  NUMBER  2246 

P.  O.  ADDRESS  Wenonah,  W.  Va.  REQUISITION  NUMBER  A-Ul 
VIA  A',  cfe  IT'.  R.  R.  Co.    OUR  ORDER  NUMBER  9422 

The  latter  form  does  not  have  as  good  appearance  before  being 
typewritten  as  afterwards.  However  the  change  is  made  for  the 
sake  of  utility  and  speed.  In  the  first  form  it  is  necessary  for  the 
operator  to  position  the  carriage  at  a  different  starting  point  for  each 
line,  whereas  in  the  last  illustration  it  can  be  readily  seen  that  all  the 
operator  has  to  do  is  to  draw  the  carriage  to  the  right  to  the  marginal 
stop,  and  write  without  any  loss  of  time. 

At  one  time  a  speed  contest  between  pen  billers  and  machine 
billers  was  held  on  one  of  the  large  railroads  of  this  country,  and 
permission  was  given  the  machine  people  to  change  the  position  of 
the  headings  of  the  freight  bills.  The  salesman  in  charge  of  the  test 
studied  to  eliminate  certain  wasted  movernents  of  the  typewriter 
carriage.  He  succeeded  in  arranging  the  printed  matter  on  the  bill 
in  a  manner  which  permitted  of  three  starting  points  in  the  heading 
and  body  of  the  bill.     By  pressing  his  tabulator  stop  after  writing 

282 


BTTJJXO  AXD  ORDEPv  RKCOrxDIXr.  39 

a  name  or  figure,  the  machine  would  immediately  jump  to  the  next 
printing  point  on  the  line.  This  arrangement  greatly  faeilitated  the 
work,  and  enabled  him  to  prove  the  superiority  of  machine  over  pen 
work.  If  he  had  endeavored  to  use  the  old  stationerv  with  its  irremdar 
headino's,  he  would  have  made  a  failure  of  the  test. 

Designing  Stationery.  In  designing  invoices,  order  forms,  and 
statistical  forms,  it  should  be  always  borne  in  mind  that  the  ordinary 
typewriter  or  billing  machine  spaces  ten  letters  to  the  inch,  sometimes 
twelve  spaces  to  the  inch  with  elite  type,  and  sometimes  eight  spaces 
to  the  inch  with  large  Roman  type.  Therefore,  all  vertical  lines 
separating  various  columns  of  the  form  should  be  ruled  in  multiples 
of  tenths,  twelfths,  or  eighths  of  inches,  according  to  the  spacing 
(escapement)  of  the  machine  to  be  used.  The  different  styles  of 
type  are  shown  in  Fig.  20. 

In  estimating  the  distance  between  lines,  it  should  be  borne  in 
mind  that  all  t\^3ewriters  and  billing  machines  are  arranged  for  spac- 
ing one  line,  two  lines,  and  three  lines.  By  adjusting  the  spacing 
device,  the  paper  can  be  advanced  the  width  of  one,  two,  or  three  lines. 
.\11  headings  on  the  invoice  should  be  arranged  so  that  the  next 
writing  point  below,  on  the  invoice  or  order,  will  be  one,  two,  or  three 
spaces,  and  the  beginning  of  the  body  of  the  bill  should  be  arranged 
for  in  the  same  manner.  This  prevents  any  waste  of  time,  and 
:'liminates  the  necessity  of  throwing  oflf  the  ratchet  spacing  device 
of  the  machine  and  turning  the  carriage  by  hand. 

The  first  printing  point  on  an  order  or  billing  form  should  be 
placed  in  such  a  manner  that  the  marginal  stop  of  the  typewriter 
carriage,  instead  of  a  tabulator  stop,  will  be  available  for  use,  Tlie 
second  writing  point  on  the  form  should  be  the  first  column  stop 
(the  coliiiim  finder  on  the  billing  machine  is  Uie  device  which  auto- 
matically stoj)s  tlic  cari-iage  at  certain  giv(Mi  ])oints).  The  tliird 
writing  point  on  the  line  should  be  the  second  cohnnn  stop,  or  decimal 
tabulator  stop,  according  to  tlie  one  vvhicji  is  on  die  machine. 

In  Fig.  21  is  shown  an  illustration  showing  th(>  top  sheets  of 
an  order  form  designed  to  facilitate  the  work  of  the  billing  machine. 
In  addition  to  having  all  of  the  printed  headings  aligned  vertically 
on  the  last  letter  of  each  word,  each  line  is  ciflicr  one  sj)iice  or  two 
spaces  of  tlie  billing  machine  platen  rrnl)ber  roll).  'I'liis  eliminates 
any  waste  of  time  in  spacing  the  order  form  through  the  machine. 

283 


5TYLE-5  OF  TYPE^ 

No  1 

PICA.   Popular,  standard  style  for 
correspondence  and  general  work. 
Ten  characters  to  the  inch. 
1,2,3,4,5,6,7,8,9,0. 

No.  3 

MEDIUM  ROMAN.  Very  legible.  Used 
by  public  speakers.  Either  nine 
or  ten  to  inch,  as  desired 
1,2,3,4,5,6,7,8,9,0, 

No.  4 

GOTHIC.  Favorite  for  billing. 
Used  in  commercial  and  rail- 
road WORK.  Ten  to  the  inch. 
I ,2,3,4,5,6,7,8,9,0. 

No.  6 

ELITE.   Is  used  largely  for  personal 
correspondence.  Much  matter  in  small 
space  without  crowded  appearance. 
1,2,3,4,5,6,7,8,9,0. 


P'itr.  20.     Styles  of  Typewriter  and  Billing  Miicliiiu^  Tyi)e 
284 


BILLING  AND  ORDER  RECORDING  41 

The  last  sheet  of  the  form  of  the  McCaskey  Register  Co.  is 
cardboard,  with  the  numbers  1  to  31  printed  along  the  top.  A  mov- 
able metal  "spud,"  or  tip,  is  used  to  show  the  due  dates  of  each  invoice, 
and  to  enable  the  collection  clerks  to  quickly  find  the  desired  copies 
of  charges  for  the  purpose  of  sending  out  statements  from  three  to 
five  days  ahead  of  due  dates. 

Styles  of  Type.  The  size  and  style  of  type  is  a  very  important 
factor  in  all  classes  of  work  where  legible  manifolding  results  are 
wanted.  There  are  several  classes  of  type  used  in  connection  with 
billing  machines.  Different  companies  use  different  names  in  de- 
scribing them.     The  four  sizes  of  type  used  are  as  follows : 

ELITE 

PICA 

MEDIUM  ROMAN 

LARGE  (or  full)  ROMAN 

Elite.  This  style  has  come  into  general  use  in  connection  with 
correspondence.  It  gives  a  dignified  style  to  a  letter.  It  is  the 
hardest  type  to  keep  clean — the  most  destructive  to  the  rubber  roll 
and  typewriter  ribbon  of  any  type  made.  It  also  manifolds  very 
poorly  where  a  number  of  copies  are  used,  as  the  type  is  so  small 
that  the  sixth  or  seventh  copy,  and  many  times  the  third  and  fourth, 
are  so  blurred  that  it  is  impossible  to  tell  an  e  from  an  a  or  an  o. 

This  style  of  type  is  sometimes  used  for  making  up  tabulated 
statements  where  it  is  desired  to  crowd  a  large  number  of  figures 
to  the  inch. 

Pica.  This  is  the  most  generally  used  type  of  any.  It  mani- 
folds quite  well  up  to  six  and  seven  copies.  It  is  possible  to  write 
only  ten  figures  of  this  size  to  the  inch. 

Medium  Ilonidii.  This  is  the  next  larger  size  type  than  the 
pica  and,  on  account  of  it  being  larger,  it  gives  better  manifolding 
results.     It  also  writes  ten  letters  to  an  inch. 

Large  Roman.  This  is  the  size  type  whicli  is  used  by  railroad 
and  steamship  companies  for  typewriting  their  way-bills.  It  is 
possible  to  write  only  eight  letters  to  an  inch. 

Gothic  Ti/pc.  The  t(>rm  Gothic  indicates  the  style,  a?id  not  the 
size  of  the  type.  If  the  small  points  at  tlie  top  and  bottom  of  the 
Roman  type  were  removed  (these  points  arc  called  serifs)  the  effect 

285 


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I   tilT     -t— *"— — ^^-^^^ 


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) 


*    CI    " 


i  fi  f-' 


",:>  mf^ 


286 


BILLING  AND  ORDER  RECORDING  43 

would  be  that  of  Gothic  tv'pe.  A  very  pleasing  combination  on  a 
billing  machine  is  two  different  sizes  of  Gothic  t}^e,  the  larger  size 
to  be  used  for  capital  letters,  the  smaller  size  for  the  small  (or  lower 
case)  letters.  Recent  practice  has  demonstrated  the  value  of  using 
capital  Gothic  letters  of  one  size,  as  it  increases  the  legibility  of  an 
order  or  an  invoice. 

In  manifolding,  numerals  should  always  be  of  the  "open"  kind, 
that  is,  12  3  4  5  6  7  8  9  0,  and  not  1 234567 890,  as  the 
former  are  much  the  more  legible. 

Carbon  Paper.  There  is  no  article  which  is  so  generally  misused 
in  the  commercial  world  and  which  is  so  little  understood  as  carbon 
paper.  In  order  that  the  correct  usage  may  be  clearly  understood 
a  brief  description  of  its  manufacture  is  given. 

The  chief  ingredients  of  carbon  paper  are  oil,  wax,  paper,  and 
color.  Oils  and  waxes  are  used  to  give  wearing  surface,  elasticity, 
and  body  to  the  color  mixture.  Tissue  paper — generally  of  imported 
quality — with  a  fine,  strong  fiber  is  used.  The  quality  must  be  first 
class  in  order  to  insure  absence  ot  holes  and  other  imperfections  in 
the  sheets.  Generally  the  sheets  are  cut  20  X  30  inches.  A  ream  is 
regarded  as  containing  500  sheets.  Three  weights  of  paper  are 
used,  41b.,  71b.,  lOlb.,  respectively,  meaning  that  500  sheets  of  the 
above  size  of  paper  will  weigh  the  number  of  pounds  named, 
according  to  the  thickness  of  the  paper. 

Color.  The  only  really  indelible  color  is  black;  that  is  because 
carbon  is  the  basis  of  the  color.  The  colors  wiiich  are  used  are 
powders  which  have  been  ground  as  fine  as  possible.  They  are 
mixed  in  proper  proportions  with  oils  and  wa.xes.  Formerly  the 
mixture  was  applied  by  hand,  but  great  strides  have  been  made  in 
machinery  for  automatically  applying  the  color  evenly  to  the  paper. 
It  is  important  that  the  color  or  pigment  be  ap})lied  evenly  to  the 
paper  and  that  it  penetrates  the  fiber,  rnless  tlie  pajx-r  retains 
the  pigment,  the  carbon  paper  will  not  wear  properly.  'V\\v  longer 
the  color  adheres  to  the  paper,  the  longer  it  can  be  used. 

Finish.  The  finish  of  carbon  j)aper  is  the  factor  which  is  so 
little  understood  by  the  public.  Garbon  papers  are  finished  with 
hard,  medium,  and  soft  finishes.  The  hard  will  scarcely  rub  ofT  on 
the  hand  under  pressure,  the  n<'\t  will  rub  some,  and  the  soft  finish 
will  smudge  if  pres-sed  against  tlie  hand.     Each  finish  is  intended  for 

287 


44  lULLlXG  AND  ORDER  RECORDING 

a  definite  use,  wliich  will  be  explained  later.  The  manifolding 
power  of  carbon  paper  depends  absolutely  on  the  t\'pewriter  itself, 
the  hardness  of  the  rubber  roll,  the  touch  of  the  operator,  and  the 
weight  of  paper,  and  lastly,  the  finish  of  coating  on  the  paper.  Two 
oj^erators  on  the  same  t}'j)ewriter  can  secure  totally  different  results 
because  one  will  have  light,  and  the  other  heavy,  touch.  The  regular 
rubber  rolls  which  are  furnished  with  typewriters  are  medium  hard — 
in  six  months  or  a  year  they  gradually  grow  harder,  eventually  be- 
coming as  hard  as  slate.  If  a  typewriter  is  to  be  used  for  regular 
work  as  well  as  heavy  manifolding,  it  should  have  two  different  rolls, 
one  for  each  kind  of  work.  There  is  no  reason  for  using  a  medium 
hard  rubber  roll  on  the  machine,  getting  poor  results,  and  then 
blaming  the  carbon  paper.  Use  a  hard  rubber  roll  on  the  machine 
and  there  will  be  no  difficulty.  Some  makes  of  machines  have 
interchangeable  rolls  (knowai  as  'plaiens)  w^hich  are  very  useful.  It 
is  the  work  of  a  minute  only,  to  remove  one  and  place  the  other  on 
the  machine. 

Four-Pound  Paper.  This  class  of  carbon  paper  has  a  heavy, 
sensitive  coating,  and  is  intended  for  heavy  manifolding — for  making 
from  five  to  twenty  copies.  Soft-finish  carbon  papers  are  always  used 
where  heavy  manifolding  is  to  be  done.  The  finish  of  the  paper  which 
is  being  written  upon  is  also  a  factor.  Papers  with  a  hard  finish — 
that  is,  a  shiny  surface — do  not  allow  the  color  of  the  carbon  paper 
to  take  hold,  and  yet  a  paper  with  the  soft  finish  will  allow  the  color 
to  spread,  and  make  a  poor  copy.  This  class  of  paper  is  also  used 
for  making  a  few  copies  on  very  light-stroke  machines  like  the  Ham- 
mond. 

Seven-Pound  Paper.  This  weight  of  paper  is  adapted  for  mak- 
ing from  one  to  five  copies.  Being  heavier  than  the  four-poimd,  it 
will  wear  longer.  If  coated  heavily  it  will  give  more  impressions 
than  if  lightly  coated,  but  the  impressions  will  not  be  as  clear  and 
clean. 

Ten-Pound  Paper.  This  w^eight  of  paper  is  intended  for  use 
where  one  or  two  copies  are  wanted.  Its  w^eight  enables  it  to  stand 
the  hard  usage  to  which  it  is  put.  On  one  or  two  copies,  the  addi- 
tional weight  or  thickness  of  the  carbon  paper  does  not  affect  the 
imprint.  This  class  of  paper  is  used  with  billing  machines  of  all 
kinds. 


288 


BILLING  AND  ORDER  RECORDING  45 

F}iU  Carhoti  Papers.  This  is  a  paper  which  is  coated  on  hoth 
sides  for  making  a  mnltipiicity  of  copies  on  tissue.  The  pieces  of 
carbon  paper  are  placed  between  every  other  piece  of  tissue  paper 
and  manifold  on  the  top  of  one  sheet  and  the  bottom  of  the  next. 
This  carbon  paper  is  used  to  reduce  the  bulk  of  paper  in  the  type- 
writer— one-half  as  much  carbon  paper  being  required.  It  is 
sometimes  called  double  carbon  paper,  and  is  mostly  used  by  rail- 
roads in  making  up  way  bills  on  yellow  (dandelion  grade)  tissue  paper. 

Copij  Carbon  Papers.  This  paper  is  for  use  where  it  is  neces- 
sary or  desirable  to  make  a  carbon  copy  from  which  to  make  a  letter- 
press copy.  Hektograph  carbons  are  for  making  carbon  copies  to 
be  used  in  a  hektograph. 

Pencil  Carbons.  This  class  of  carbon  paper  is  made  in  the 
heavy  grades  of  paper  from  seven-pound  to  twenty-pound  and  is 
made  full  carbon  in  the  seven-pound  weight. 

Pen  Carbon.  This  class  of  carbon  paper  is  made  in  the  seven- 
pound  and  ten-poiuid  weights. 

Troubles  and  Remedies.  Carbon  papers  made  in  summer  have 
different  treatment  in  the  matter  of  color  mixture  than  those  made 
in  winter.  Lasers  should  always  remember  that  carl)on  })aper  which 
has  lain  unused  all  year  has  gradually  dried  out  and  depreciated 
in  efficiency.  The  fresher  a  carbon  paper  the  better — therefore  it 
is  not  economy  to  buy  too  large  a  supply  if  it  is  liable  to  stand 
for  more  than  six  months.  Never  store  carbon  paper  n(>ar  heat, 
nor  in  the  direct  rays  of  the  sun. 

The  one  great  difficulty  experienced  with  carbon  ])aper  is  the 
streak(>d  effect  called  "treeing."  This  is  caused  by  the  carbon  j)aper 
being  Inserted  unevenly  between  the  sheets  of  paper  used  with  it. 
Once  wrinkled,  it  remains  so,  and  gives  the  streaked  result  as  long  as 
it  hists.  To  guard  against  this  trouble,  the  operator  should  watch 
that  the  carbon  paper  is  not  wrinkled  when  inserting  it  between  the 
sheets  of  paper,  and  should  press  the  release  lever  on  the  typewriter 
to  release  the  paper-feed  rolls  on  the  uiachine,  after  tlic  |)aper  is 
inserted  in  it,  so  that  the  une(|ual  tension  of  the  j)aj)er  and  carbon 
paper  may  adjust  itself. 

Durability  of  Color.  Black  paper  made  of  carbon  j)igment 
is  indelible  and  most  durable.  Blue  or  puiph'  ])a])e>rs  are  next  in 
the  order  of  durability  of  color,  and  arc  made  of  aniline  dyes.     Green 

289 


40  TUTJJXr;  AXD  ORDER  RECORDING 

luxt,  and  R-d  lu-xt.  Tlie  fact  is  that  red  and  (,nveii  carbon  papers 
shonld  not  he  ns(Ml  for  pcnnancMit  records,  as  they  will  fade  (juickly. 

Wciiriug  Qualiiy  of  Paper.  Many  times  a  typewriter  will 
have  a  rnhher  roll  (platen)  which  has  become  pitted  and  worn  from 
age  and  the  nse  of  periods,  commas,  liA'phens,  and  ditto  marks. 
This  is  very  destrnctive  to  carbon  paper.  New  rubber  rolls  should 
be  placed  on  the  machine.  It  is  not  economy  to  use  the  cheap 
variety  which  can  be  purchased  for  75  cents  and  which  is  nothing 
more  tlian  rubl)er  hose  drawn  over  a  wooden  core.  The  latter  is  not 
cylindrical  and  will  give  trouble.  The  t\'])e  will  print  unevenly  and 
cause  bad  alignment,  for  which  the  machine  will  be  blamed. 

Blinds.  Blind  is  the  name  given  to  a  sheet  of  paper  used  in 
connection  with  manifold  work  for  preventing  all  of  the  information 
on  the  top  sheets  from  being  manifolded  on  certain  of  the  sheets 
underneath. 

For  instance,  in  describing  the  scheme  for  providing  the  pack- 
ing department  with  a  description  of  the  goods  to  be  shipped,  but 
with  the  quantity  column  blank,  it  will  be  remembered  how  a  strip 
of  paper  of  proper  size  wide  enough  to  cover  the  quantity  column 
was  placed  over  the  left  side  of  the  invoice  from  top  to  bottom. 
Therefore  all  quantities,  instead  of  manifolding  onto  the  packer's 
sheet,  manifolded  onto  the  strip  of  paper  known  as  the  blind. 

A  blind  may  be  of  any  given  shape,  and  cut  away  at  the  top, 
side,  or  bottom;  or,  in  some  cases,  irregular-shaped  cuts  are  made 
in  the  middle  of  the  sheet  or  near  the  edges.  The  cuts  are  made  in 
order  to  allow  certain  information  to  be  manifolded  on  the  next 
sheet  under  the  blind.  The  balance  of  the  information  on  the  top 
sheet  is  manifolded  onto  the  blind,  which  is  thrown  away.  It  is  rea- 
soned that  it  is  cheaper  to  use  a  sheet  of  paper  for  this  purpose  than 
it  is  to  stop  and  make  a  separate  sheet  with  part  of  the  information 
only,  t\-pewritten  thereon. 

HOW  TO  HANDLE  ORDERS  AND  BILLS  ON 
BILLING  MACHINES 

Loose=Leaf  Sheets  with  Invoices  in  Blanket  Form.  In  some 
lines  of  business  it  is  possible  to  use  invoices  of  equal  size.  Some 
firms  therefore  have  the  invoices  and  sales  sheets  of  equal  size.     The 

290 


BILLING  AND  ORDER  RECORDING  47 

top  sheet  is  perforated  horizontally  at  equal  distances,  which  permits 
the  invoices  to  be  torn  apart  so  that  one  blanket  of  form  invoices 
may  be  separated  into  three  or  four  separate  invoices.  This  plan 
can  be  used  where  the  work  is  done  on  an  ordinary  letter-writing 
machine.  In  preparing  the  papers  for  billing,  a  sheet  of  carbon 
equal  in  size  to  the  sales  sheet  is  used.  A  heavy-weight  carbon  (10- 
Ib.)  with  hard  finish  is  the  best  kind  of  carbon  to  use  for  this  wo-rk. 
If  an  extra  sales  sheet  is  needed  for  any  purpose,  a  duplicate  sheet  of 
paper,  preferably  of  another  color,  can  be  used  with  another  sheet 
of  carbon  interleaved  between  the  two  sales  sheets.  This  method 
is  wasteful  of  space  as  far  as  the  sales  sheet  is  concerned.  If  each 
invoice  were  loose  and  placed  in  the  machine  in  such  a  manner  that 
the  first  written  line  on  the  invoice  would  be  two  or  three  spaces  only 
below  the  last  item  of  the  previous  invoice  manifolded  on  the  sales 
sheet,  generally  one  more  invoice  of  average  size  could  be  mani- 
folded onto  the  sales  sheet. 

Loose=Leaf  Sales  Sheet  with  Separate  Invoices.  This  combina- 
tion is  made  possible  by  the  billing  machine,  the  flat-bed  and  the 
cylinder  style.  Cylinder  billing  machines  are  equipped  with  spe- 
cial carriages  having  special  feed  rolls  which  hold  the  sales  sheet 
until  it  is  fed  entirely  through  the  machine.  Cylinder  machines 
also  have  an  inde'pendent  feed  roll  which  can  be  released  by  a  special 
lever.  This  permits  an  invoice  to  be  inserted  in  the  macliine,  and 
then  clamped  into  position  by  the  intermediate  feed  roll  and 
fed  through  the  machine  with  the  sales  sheet  until  the  invoice  is 
completed.  The  intermediate  feed  roll  is  then  released,  and  the 
invoice  removed  without  disturbing  the  sales  sheet.  The  next  invoice 
is  then  placed  in  position,  .iiid  the  same  operation  is  repeated.  This 
allows  one  invoice  to  be  manifolded  very  nearly  under  the  ])r(jvi()iis 
invoice.  Some  firms  having  invoices  of  one  or  two  ilcins  only,  ^\  liich 
permits  of  from  seven  to  nine  invoices  being  manifolded  on  each  l)age, 
have  the  invoices  made  up  in  blanket  form;  that  is,  seven  or  eight 
invoices  to  a  strip.  After  each  invoice  is  manifolded  they  advance 
the  next  invoice  into  jxjsilion  and  (hen  tear  the  invoices  ;tj)art  as 
previously  described. 

Carbon  Paper  Cut  for  this  Class  of  Work.  Some  operators 
doing  condensed  bilhng  work  prefer  to  use  carbon  paper  the  same 
size  as  the  invoice,  and  to  remove  the  carbon  [)aper  each  time  an  in- 

2yi 


4S  lULr.l\(;  AM)  OKDKR  KKCOUDING 

vokv  is  coniplrtcd.  This  necessitates  a  great  deal  of  liandling  of 
carbon  paj)t'r.  It  is  preferable  to  use  a  large  sheet  of  carbon  paper 
(he  same  size  as  the  sales  sheet,  feeding  it  through  the  billing  machine 
with  the  sales  sheets.  This  eliminates  the  necessity  of  picking  up  a 
piece  of  carbon  paper  each  time  an  invoice  is  placed  in  the  machine. 
With  the  former  method,  if  one  had  four  invoices  to  one  page  of  a 
sales  sheet,  it  retjuired  one  to  pick  up  the  same  piece  of  carbon  paper 
four  times,  or  once  with  each  invoice.  The  latter  plan  necessitates 
handling  the  carbon  paper  once  only,  when  the  sales  sheet  is  placed  in 
the  machine.  The  operator  positions  the  second  or  third  invoice 
on  a  sales  sheet,  in  order  to  avoid  writing  over  the  previous  invoice, 
by  spacing  the  carriage  three  times  after  an  invoice  is  completed. 

Using  the  Sheets  Serially.  All  sales  sheets  should  be  serially 
numbered,  in  order  that  when  placed  in  a  binder  the  loss  of  any 
sheet  may  be  detected  by  a  missing  number.  Some  firms  prefer  to 
use  one  side  of  a  sales  sheet  only.  In  this  case,  a  sales  binder  hold- 
ing 375  sheets  would  have  375  pages.  Where  the  sheets  are  num- 
bered on  both  sides,  the  sales  binder  w^ould  have  750  pages.  If  the 
appearance  of  a  page  is  marred  by  an  invoice  being  spoiled,  that 
sheet  is  not  throw^n  away,  and  the  fact  that  it  is  not  is  an  incentive 
for  the  operator  to  do  good  work. 

Handling  Credit  Memoranda.  Some  firms  prefer  to  handle 
their  credit  memoranda  on  different-colored  paper  (generally  pink) 
for  both  invoices  and  the  large  sheets  which  correspond  to  sales 
sheets.  All  of  the  rules  which  govern  the  making  of  invoices  and 
loose-leaf  sales  sheets  apply  to  the  execution  of  credit  memoranda. 

General  Remarks  Regarding  Billing  Machines.  The  flat-bed 
billing  machine  enlarged  somewhat  upon  the  idea  of  using  special 
characters  for  certain  abbreviations  peculiar  to  various  lines  of  trade. 
For  instance,  in  the  shoe  business,  the  following  abbreviations  are 
some  of  those  used: 


WOM 

means  Women's 

CHI 

Child's 

BOYS' 

Boys' 

BAL 

Balmorals 

BLU 

Bluchers 

PR 

Pair 

PRS 

Pairs 

DOZ 

Dozens 

292 


BILLING  AND  ORDER  RECORDING  49 

The  cylinder  machines  have  adopted  the  same  phin.  h\  the 
cylinder  machii^es  there  are  two  distinct  classes — those  having  two 
type  to  a  type-bar,  snch  as  the  Remington  and  the  Underwood,  and 
those  having  one  t}-pe  to  a  t}^e-bar,  with  donble  the  number  of  bars, 
such  as  the  Smith-Premier.  Both  classes  of  machines  can  use 
special  characters,  but  the  machines  having  one  type  only  to  a  bar 
have  a  preference  in  that  they  have  more  room  in  which  to  place 
special  characters. 

There  is  considerable  saving  in  the  use  of  special  characters,  as 
evidenced  by  the  following  example: 
OCT  14  09. 

This  necessitates  nine  strokes  where  each  letter  is  written 
separately.    Had  this  been  written  by  three  special  charac- 
ters, it  would    have  necessitated  five  strokes  only.     The 
special  characters  would  be  used  as  follows:  OCT.-space- 
14-spsLce-09. 
To  the  uninitiated,  it  would  seem  that  a  special  character  of 
three  letters,  such  as  the  abbreviation  OCT.,  would  occupy  three  spaces 
on  the  machine,  and  consequently  would  overlap  on  the  word  at  the 
right.     This  is  obviated  by  placing  the  type  on  the  type-bar  in  such 
a  manner  that  the  letter  T  of  the  abbreviation  is  in  the  printing  point 
of  the  paper.     The  following  illustration  will  show  how  the  type  are 
placed  or  aligned  in  order  to  secure  the  desired  results: 

OCT  14  09 
1       I      I 

As  the  month  always  precedes  the  next  word,  the  abbreviation 
OCT  is  aligned  so  that  the  two  first  letters  are  to  the  left  of  the  print- 
ing point.  In  case  a  machine  were  equipped  with  numbers  for  all 
the  days  of  the  month,  the  character  J4  would  b(>  aligned  to  print 
either  side  of  the  printing  point.  As  the  abbreviation  09  would 
always  follow  and  never  precede,  it  would  be  aligned  with  the  0  in 
the  printing  point,  with  the  9  printing  to  the  riglit  of  it.  It  is  very 
important  to  have  special  characters  properly  aligned  so  that  the 
abbreviations  which  always  precede  are  aligned  to  j)rint  on  the  last 
letter,  and  the  abbreviations  which  follow  are  aligned  to  print  on  the 
first  letter. 

It  is  impossible  to  print  abbreviations  in  solid  matter  such  as  a 
letter.     They  are  only  to  be  used  in  connection  with  dates  of  invoices 

293 


50  BILLIXC  A\l^  ORDEPv  RKrORDTXG 

or  orders,  h\  connection  with  names  of  firms.  For  instance,  the 
abbre\iation  Alcs.sru.,  at  the  beginning  of  a  firm  name  where  snch  a 
term  is  desired,  or  the  abbreviation  Co.  at  the  end  of  a  firm  name  or 
the  abbreviations  Pr.,  Doz.,  Gro.,  and  similar  abbreviations,  come  in 
tlie  body  of  a  bill  and,  preferably,  in  the  first  column  after  the  quantity. 

It  should  l)e  remembered  that  when  the  rubber  platen  of  a  billing 
machine  becomes  worn  and  cut  with  holes  incident  to  the  use  of  periods 
commas,  h^-phens,  etc.,  the  special  character  t^-pe  will  sometimes 
print  heavy  at  the  top  and  light  at  the  bottom  of  the  letter,  or  vice 
versd.  This  is  remedied  to  some  extent  by  placing  a  new  rubber 
roll  on  a  cylinder  billing  machine,  or  a  new  rubber  covering  on  a  flat- 
bed billing  machine. 

Special  characters  are  used  to  a  better  advantage  on  the  under- 
stroke  (or  blind  machine)  than  on  the  visible  machine.  In  the  latter, 
the  t}'pe-bars  are  all  grouped  in  less  than  a  half  circle,  which  neces- 
sarily crowds  the  tN'pe-bars  a  little  closer  together,  and  therefore  does 
not  permit  of  special  characters  of  a  large  size. 

Tabulators  on  Billing  Machines.  It  is  absolutely  essential  that 
every  billing  machine  be  furnished  with  either  a  single-stop  (known 
as  a  column-stop)  tabulator  or  a  decimal  tabulator,  preferably  the 
latter.     A  single-stop  tabulator  is  used  as  follows: 

On  the  billing  machine  frame  rests  a  bar  on  which  metal  stops 
or  pegs  are  placed  at  predetermined  intervals.  By  pressing  the 
column  stop,  the  carriage  holding  the  paper  is  released,  and  jumps 
automatically  to  the  first  stop.  After  the  information  is  written, 
the  stop  is  again  pressed,  and  the  machine  jumps  automatically  to 
the  next  printing  point.  The  following  example  shows  the  use  of 
the  column  stop: 

John  Jones  Marion,  Ind.  XXV 

A.  B.  Smith  Washington,  D.  C.  XXX 

G.  Barnes  Seattle,  Wash.  XXX 

The  following  example  shows  the  use  of  the  decimal  tabulator: 

10.50 

.50 

150.25 

15560.65 

With  the  decimal  tabulator,  the  operator  would  press  the  tens 
key,  which  automatically  places  the  carriage  in  a  position  to  begin 

294 


BILLING  AXD  ORDER  RECORDIXO  51 

writing  the  amount  10.50.  If  the  cohimn  stop  were  used  for  this 
purpose,  it  would  have  stopped  the  machine  at  the  period  point,  and 
necessitated  the  operator  pushing  the  carriage  two  points  to  the  riglit 
in  order  to  begin  printing  two  points  to  the  left  of  the  decimal  points. 
Some  operators  place  the  column  stop  so  that  the  machine  always 
stops  at  the  tens  point,  and  if  an  amount  of  LOO  or  less  is  to  be  written, 
they  use  the  space  key.  This  is  quicker  than  to  always  stop  at  the 
decimal  point  and  then  position  the  carriage  properly  by  hand. 
However,  where  any  tabulated  work  involving  figures  which  vary 
greatl}  is  to  be  done,  it  is  decided  economy  to  use  a  decimal  tabulator. 
Most  operators  do  not  see  the  advantage  of  using  tabulators,  and  in 
many  instances  will  continue  to  waste  time  spacing  the  machine  with 
the  space  bar.  If  they  would  avail  themselves  of  the  tabulator  device 
they  would  jump  from  one  part  of  the  line  to  the  next  desired  point 
instantaneously.  It  should  be  remembered  that  billing  work  is  a 
constant  repetition  of  certain  manual  movements.  If  one  movement 
in  ten  can  be  eliminated,  it  is  equivalent  to  saving  one  hour  in  ten. 
To  show  the  great  advantage  of,  and  it  might  be  said, necessity  for,  time 
saving  and  short  cuts  in  large  estal)lishments,  a  device  used  by 
Butler  Bros.,  a  large  mail-order  house  with  warehouses  in  several  of 
the  large  cities,  is  an  excellent  illustration.  This  particular  scheme 
is  used  in  Jersey  City,  N.  J.  It  consists  of  two  rows  of  billing 
machine  operators  (sixty-five  in  number)  placed  in  parallel 
positions  with  an  endless  belt  running  between  them,  and  two  check- 
ing clerks  at  the  end  of  the  row.  As  fast  as  the  operators  transcribe 
the  orders  onto  the  order  forms,  the  original  and  typewritten  order 
(with  departmental  copies)  are  placed  on  the  belt  and  carried  auto- 
matically to  the  checker's  desk. 

The  rubl)er  belt  passes  over  a  pulley  at  the  edge  of  the  checker's 
desk,  which  allows  the  orders  to  fall  from  the  belt  to  the  desk.  The 
belt  returns  to  the  end  of  the  line,  where  it  revolves  around  another 
pulley.     The  pcnvcr  is  furnished  by  a  small  electric  mnloi'. 

Arrangement  of  Billing  Machines  in  Large  Business  Houses. 
In  large  businesses  in  tlie  wholesale  dry  goods,  wholesale  notions,  and 
kindred  lines,  special  arrangement  enables  a  few  billing  machines 
to  accomplish  a  large  amount  of  billing.  In  these  classes  of  business, 
it  is  the  custom  to  call  the  lot  number,  class  of  goods,  and  the  number 
of  yards  to  the  bill-clerk,  wjio  in  turn  enters  it  on  the  bill  and  dupli- 

295 


52  BILLIXC;  AND  ORDEli  RKCORDIXG 

ci\U\  Tlic  systtMU  used  Avill  be  descrihed  elsewliciv.  Hciv  It  i.s 
desired  to  toueli  u})()n  the  niovable-platt'onn  idea  only.  The  operator 
is  seated  on  an  elevated  platform  on  which  is  placed  the  billing  ma- 
chine and  the  chair.  This  platform  has  rollers,  and  can  be  moved  in 
the  aisle  between  two  rows  of  counters  on  which  the  fjoods  to  be 
shipped  are  placed.  As  soon  as  the  callers  call  off  the  lot  luimbers, 
description,  and  quantities  of  one  shipment,  the  billing  machine 
operator  moves  the  ])latforni  to  the  next  lot  of  goods,  which  enables 
him  to  hear  the  caller  clearly  wherever  the  caller  may  be.  If  the 
bill  clerk  were  permanently  located  in  one  portion  of  the  room,  he 
would  be  liable  to  make  errors  through  misunderstanding  the  caller. 
A  scheme  wdiich  is  largely  used  in  those  classes  of  business  which 
demand  the  "call  off  system"  or,  as  they  term  it,  "billing  from  call" 
is  to  call  off  the  word  sixty-five  as  if  it  were  sixity-five,  and  the  word 
fijty-five  as  if  it  w^ere  fif'dy-five.  This  prevents  confusion  between 
these  amounts  wdiich  sound  so  much  alike.  Some  firms  for  sixty-five 
use  the  term  sticky-five. 

Use  of  Computing  Machines  in  Connection  with  Billing.  Many 
firms  use  computing  machines  such  as  the  comptometer  for  proving 
the  extensions  on  invoices.  With  a  machine  of  this  character,  it  is 
possible  to  figure  all  of  the  extensions.  The  machine  at  the  same 
time  automatically  adds  the  totals,  and,  if  there  are  discounts  to  be 
taken  off  the  bill,  this  operation  can  be  performed  without  clearing 
the  machine.  For  instance,  in  the  following  example: 
12  yards  lace  50     $     6.00 

15  yards  niching  10  1.50 

24  doz.  hdchfs.  12.00       288.00 

$295 . 50 
25%  221.63 

By  clearing  the  machine,  is  meant  pulling  the  handle  which 
returns  all  of  the  wheels  to  0  for  the  beginning  of  a  new"  computation. 
Without  desiring  to  enter  into  the  mechanical  merits  of  adding 
machines,  either  listing  or  non-listing  machines,  it  is  important  to 
touch  upon  the  various  arguments  used  in  favor  of  billing  machines 
with  adding  attachments  and  without  them. 

The  flat-bed  machines  were  the  first  to  use  the  combined  machines. 
The  plan  in  use  was  to  place  two  recording  registers  on  the  billing 
machine  and  prove  the  total  of  each  bill  separately  with  one  register, 
and  accumulate  the  totals  of  all  the  bills  for  the  day  on  the  other 

296 


BILLING  AND  ORDER  RECORDING  53 

register.  Certain  firms  used  extra  recording  registers  for  recording 
the  totals  of  extra  columns  on  the  sales  sheets  in  which  they  analyzed 
the  sales  according  to  classes  of  goods  or  some  other  classification. 
Some  firms  did  not  add  the  bills  when  making  the  extensions  of  tlie 
prices  and  quantities,  but  left  the  additions  for  the  adding  machine. 
The  only  draw-back  to  this  plan  was  that  if  the  operator  copied  a 
wrong  total  from  the  register  dial  it  caused  trouble.  This  fault, 
if  fault  it  may  be  called,  as  it  is  not  the  fault  of  the  machine,  but  of 
the  operator,  has  been  corrected  by  placing  a  subtracting  device  on 
the  late  models  of  combined  billing  and  adding  machines,  wiiereby 
the  substracting  device  is  thrown  into  action  when  the  total  of  the 
bill  is  being  written.  If  the  correct  amount  of  the  bill  is  written  on 
the  invoice,  the  dial  figures  all  turn  to  ciphers,  which  indicates  that 
the  amount  has  been  correctly  transcribed  by  the  operator.  Other 
improvements  will  likely  follow  in  the  many  machines  which  are 
being  placed  upon  the  market.     See  Fig.  29  on  Page  67. 

Some  firms  prefer  to  do  all  the  billing  as  one  operation,  and  use 
a  separate  or  computing  machine,  as  the  case  may  be,  for  proving 
the  additions  at  the  end  of  the  day.  The  reason  is  that  by  having 
two  separate  machines  they  can  be  used  by  different  people  during 
the  day  for  different  work. 

If  computing  machines  are  needed  for  adding,  multiplying,  and 
taking  off  discounts,  the  non-listing  machines  are  recommended,  as 
they  are  key-driven.  If  adding  machines  are  needed  when  printed 
lists  are  wanted  of  all  additions,  then  listing  machines  are  recom- 
mended. The  general  public  has  recognized  that  each  class  of 
machine  has  its  separate  use.  Some  firms  check  the  totals  of  listing 
machines  with  non-listing  machines,  hi  order  to  save  time  and  paper. 
Non-listuig  machines  are  used  for  taking  a  record  of  rolls  and  yards 
of  cloth  during  inventory  time,  and  later  are  used  to  multiply  the 
extensions.  Some  dry  goods  firms  hire  expert  operators  at  a  dollar 
an  hour  to  do  this  class  of  work,  as  it  can  be  done  in  one-fifth  the  time 
that  it  would  otherwise  take.  For  instance,  an  example  in  muhipli- 
cation,  such  as  Ifi2  X  ^'5-5,  would  take  approximately  ten  seconds  to 
write  down,  multij)ly,  and  set  down  the  figun-s.  With  a  tnnltij)Iying 
machine  mentioned  above,  it  can  be  done  in  two  seconds. 

With  listnig  adding  machines,  ('f|ii;illy  v;ihi;ililc  rrsnlls  can  be 
obtained.     In  certain  classes  of  work,  sncli  ;is  collccijon  ielters  in 

297 


54  BILT>TXG  AND  ORDER  RECORDING 

banks  where  there  are  rows  of  figures  representing  the  various  checks^ 
and  tj'pewritten  information,  such  as  description  of  endorsements, 
it  is  much  faster  to  place  the  sheets  in  the  ailding  machine  and  list 
the  amounts  thereon  and  automatically  print  the  total  with  the 
adding  machine.  This  avoids  the  trouble  due  to  operators  print- 
ing wrong  totals  on  the  billing  machhie.  The  typewritten  infor- 
mation is  then  put  in  on  the  t}^ewriter  or  billing  machine.  There 
is  this  to  be  said,  however,  if  an  operator  prints  a  wrong  amount  on 
a  listing  adding  machine,  the  answer  will  be  incorrect,  but  the  machine 
will  print  a  correct  total  of  the  figures  printed  by  the  machine.  A 
listing  machine  can  be  equipped  with  a  wide  carriage  and  used  for 
printing  lists  of  figures  just  the  same  as  a  typewriter.  Time  should 
never  be  wasted  printing  a  statement  covering  rows  of  tabulated 
figures  on  any  t}^ewriter,  and  then  taking  the  statement  to  an  adding 
machine  and  adding  the  columns  to  prove  them,  if  it  can  possibly 
be  arranged  to  make  up  the  entire  statement  on  the  listing  machine. 
Listing  machines  are  now  prepared  to  manifold  at  least  two  extra 
copies,  and  are  equipped  with  column  tabulators. 

For  adding  a  number  of  columns,  with  or  w'ithout  a  grand  total 
column  at  either  the  right  or  left  side  of  the  book  or  sheet,  and  where 
the  items  are  written  one  at  a  time  in  different  columns,  the  combined 
t^'pewriter    and    adding    machine    is    recommended.     One   such   is 

shown  in  Fig.  22. 

COLORED  SHEETS 

The  "colored  sheet  system"  indicated  below  makes  it  unnec-essary 
to  refer  to  the  written  matter  for  distribution.  A  glance  indicates  the 
department  or  service  for  which  every  slip  is  intended.  The  distril)u- 
tion  may  be  as  follows: 

The  ofiice  record  (register)  may  l)e  filed  numerically; 

The  order  book  copies  alphabetically; 

The  requisitions  by  departments; 

The  shipping  instructions,  chronologically; 

The  salesman's  records,  territorially; 

The  cost  sheets,  according  to  classification. 

One  copy  may  also  be  filed  geogruphically  for  comparison  of 
results.     This  furnishes  a  complete  record  and  makes  reference  easy.* 


*As  a  general    rule,    the    "order    acknowledgment"    has    been    handled 
separately,  although  it  is  possible  to  include  it  in  tlie  one  writing. 


298 


BILLING  AND  ORDER  RECORDING 


55 


This  summary  illustrates  the  use  of  the  color  scheme,  and  gives 
a  brief  hint  of  the  plan  usually  followed  in  filing  order  sheets  for 
various  departments.  It  should  be  remembered  that  the  best  billing 
and  order  plan  in  the  world  can  be  made  the  most  abject  failure,  if 
proper  attention  is  not  given  to  the  proper  filing  of  sheets. 

^     For  example,  if  clerks  in  looking  for  a  certain  order  could  always 
give  the  order  number,  but  not  the  name  of  the  customer,  it  would 


Fig.  22.     Combined  Typewriter  and  Adding  Machine.     Elliott- Fisher  Co. 

be  wrong  to  file  the  orders  alphabetically;  in  such  cases,  file  the  orders 
numerically.  Always  file  papers  according  to  the  information  which 
the  clerk  or  executive  will  have  at  hand  when  looking  up  the  same. 
Sometimes,  papers  will  l>e  just  as  easily  found  when  filed  numerically 
as  alphabetically. 

Reference  Information.  One  very  imj)ortant  feature  to  remem- 
ber in  designing  forms  is  to  place  all  reference  information  on  the 
right-hand  side  of  the  sheet.  In  leafing  loose  sheets  held  in  binders, 
it  will  be  easy  to  find  th?  desired  sheet  if  this  plan  is  followed;  but, 
if  the  reference  numbers  are  placed  on  the  left  side  of  the  .sheet,  it 
will  ))e  necessary  to  open  the  binder  relatively  wide  to  .see  each  number. 

In  the  illustration,  Fig.  23,  it  will  be  noted  that  the  order  num- 
ber is  properly  placed,  and  that  the  })rinted  headings  are  aligned 


299 


56  BUJJXC;  AM)  OKDKK  RKCOUDTXG 

horizontally  at  the  hack,  which  permits  all  typewritten  matter  to 
be  started  evenly.  The  value  of  this  point  was  touched  upon  in  a 
previous  chapter,  as  to  saving  of  time  in  the  execution  of  tlie  work. 
In  this  particular  form,  however,  there  is  t^'pewritten  matter  to  the 
left  of  the  headings,  such  as  account  of,  ship  to,  etc.  The  marginal 
stop  on  the  billing  machine  should  be  set  for  the  first  t\^ewritten  mat- 
ter, and  tabulator  stops  used  for  all  matter  to  the  right  on  each  line. 

COMPOUND  FORMS 

One  of  the  most  ett'ective  means  of  short-cutting  work,  where 
the  nature  of  the  business  will  permit,  is  through  the  use  of  compound 
forms.  These  forms  derived  their  name  from  the  combination  of 
order  and  billing  v/ork  on  one  set  of  sheets  and  accomplish  in  one 
operation,  sometimes  in  two,  all  the  clerical  work  incident  to  the 
receipt,  registering,  acknowledgment,  billing,  charging,  and  shipping 
of  an  order. 

It  can  be  readily  seen  that  if  a  firm  can  lill  its  orders  completely, 
or  almost  so,  that  there  is  no  use  to  wait  until  the  order  is  filled  before 
billing  it.  It  is  a  great  deal  easier  to  place  another  sheet  along  with 
the  order  forms  and  use  it  for  an  invoice.  It  is  generally  placed  as 
the  top  sheet  of  the  set,  and  therefore  it  is  the  original. 

Goods  Shipped  for  Entire  Order.  If  the  miture  of  the  business 
is  such  that  the  firm  can  always  fill  its  orders  completely,  it  is  per- 
fectly safe  to  enter  prices,  make  the  extensions,  and  complete  the 
invoice,  with  the  possible  exception  of  the  date  when  the  goods  are 
finally  shipped,  if  they  cannot  be  sent  out  the  same  day.  In  such 
cases,  a  printed  heading  is  provided  on  the  invoice,  opposite  which 
the  shipping  date  is  typewritten.  This  then  becomes  the  date  of 
invoice. 

Goods  Almost  Completely  Shipped.  If  it  is  possible  that  one, 
two,  or  three  items  cannot  be  shipped  at  all,  or  in  part  only,  it  is  the 
custom  to  hold  the  invoice  (and  copy,  or  copies,  when  there  are  any) 
in  the  office,  arranged  alphabetically  according  to  customers,  pending 
receipt  of  information  from  the  shipping  department  as  to  quantities, 
weights,  etc.,  of  goods  shipped.  This  invoice  is  an  exact  typewritten 
duplicate  of  the  balance  of  the  order  forms,  and  has  the  heading  for 
quantities  to  be  shipped  and,  usually,  prices  for  each  article.  Neither 
the  extensions  of  the  items  nor  the  footing  of  the  bill  have  been  made. 

300 


BILLING  AXD  ORDER  RECORDING 


57 


(renerally,  a  copy  of  the  order  showing  the  quantities,  weights,  or 
measures  marked  thereon  is  handed  to  the  office.  The  copy  of  tlie 
invoice  is  then  placed  in  the  machine,  and  the  prices,  extensions,  and 


r 


■ 

1 

lli 

sti-e 

— ■  o 

2  ? 


S^ 


footings  made  to  correspond  with  the  items  which  huAe  hecn  shipped. 
The  question  arises  in  regard  to  the  items  which  have  not  been  shipj)e(l. 
Some  firms  print  on  the  bottom  of  each  invoice  the  sentence:  All 
items  which  are  imi  priced  nor  extended  have  hee)i  "hack-ordered"  and 
will  be  shipped  later.     Other  firms  tyj^ewrite  an  X  in  tlie  price  column 


301 


:)S  BITJJNT;  and  order  RErORDIXG 

t)r  number  the  items  which  have  not  been  shipped.  They  then  make 
a  written  explanation  on  the  l)ottom  of  the  invoice  re<i^ar(lin<;  the  date 
at  wliich  tiie  balance  of  the  goods  will  be  shipped.  In  some  lines 
of  business  this  plan  tells  the  customer  not  only  what  he  ordered,  but 
what  has  been  shipped  and  when  the  balance  will  be  shipped.  The 
memo  on  the  bottom  of  the  invoice  also  saves  the  writing  of  letters  to 
customers. 

In  other  lines  of  business,  this  plan  would  be  absolutely  unfit — 
for  the  reason  that  certain  firms  do  not  wish  to  call  the  customer's 
attention  to  the  items  which  have  been  omitted. 

Compound  forms  generally  have  two  columns  at  the  left — one 
for  the  goods  ordered,  the  other  for  the  goods  shipped.  If  this  w^ere 
not  provided,  it  would  be  necessary  to  erase  Cjuantities  in  all  instances 
where  a  different  quantity  w^ere  shipped  from  the  quantity  ordered. 

Fig.  24  is  a  good  illustration  of  forms  for  a  line  of  business  which 
always  has  the  goods  in  stock.  The  various  brands  of  goods  are 
printed  in  the  body  of  the  invoice.  All  that  is  necessary  is  to  write 
the  quantities,  prices,  extensions,  and  footings.  Four  copies  are 
manifolded — invoice,  warehouse  order,  house  record,  and  collection 
record. 

RETAIL  DRY  GOODS  BILLING 

The  retail  dry  goods  houses  and  department  stores  use  a  form 
of  billing  which  is  different  from  any  other,  in  that  the  bills  are 
rendered  to  the  customer  once  a  month  only.  There  are  other  lines 
of  business  which  render  their  bills  monthly,  and  which  use  the  same 
style  of  billing. 

A  folded  form  is  used,  the  top  sheet  w'hen  completed  at  the  end 
of  the  month  is  mailed  to  the  customer.  The  second  or  duplicate  is 
retained  for  the  record  of  purchases. 

When  a  customer  makes  a  purchase,  the  saleslady  makes  the 
charge  in  her  sales  book.  One  copy  goes  with  the  goods  to  the 
wrapping  desk,  the  other  goes  to  the  cashier's  desk.  The  wrapper 
cannot  handle  a  package  without  a  duplicate  sales  slip.  The  packer 
removes  from  his  duplicate  slip  a  stub  bearing  the  same  number  as 
the  slip.  This  is  to  prevent  goods  being  removed  from  the  house 
without  proper  authority.  The  cashier  retains  the  slip  if  cash  has 
been  paid,  but  passes  the  slip  on  to  the  auditing  department,  if  the 
slip  is  marked  by  the  saleslady  charge. 

302 


•■•%*> 


FiK-  24.     Conipourxl  Foniis,  Showing  Invoice  uiid  Olllce  liecords 
heininylon  Typewriter  Co, 


303 


(M) 


HIMJXC   AND  OUDKll  UKCORDTXG 


In  la I'ijji.' stores  like  John  Wunanuker's,  the  customers  arc  given 
l)v  the  credit  man  a  brass  check  with  their  number  marked  thereon. 
This  shows  each  clerk  with  whom  they  deal  that  they  are  entitled  to 
credit,  without  having  them  identified  each  time  they  make  a  pur- 
chase. In  smaller  cities,  the  clerks  become  familiar  with  all  the 
charge  customers,  and  any  plan  of  this  character  is  not  needed. 

The  sales  slips  are  all  numbered  from  1  to  50,  and  the  auditing 
department  checks  back  each  day  all  the  slips  of  the  different  sales- 
people to  see  if  all  the  slips  have  been  accounted  for.  Some  stores 
have  a  chart  on  the  cashier's  desk  ivith  the  clerk's  number  at  the  top  of 
each  column,  and  the  check  numbers  listed  serially  in  each  column,  as 
shown  in  Table  I. 

TABLE  I 
CHART  FOR  CHECKING  RETAIL  SALES  SLIPS 


1 

2 

3 

4 

5 

' 

7 

8 

9 

10 

11 

12 

13 

14 

15 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

2 

2 

2 

2 

2 

2 

2 

2 

2 

2 

2 

2 

2 

2 

2 

3 

'  3 

3 

3 

3 

3 

3 

3 

3 

3 

3 

3 

3 

3 

3 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

5 

5 

5 

5 

5 

5 

5 

5 

D 

') 

5 

5 

5 

5 

5 

6 

6 

6 

6 

6 

6 

6 

6 

6 

0 

6 

6 

6 

6 

6 

7 

7 

7 

7 

7 

7 

7 

7 

7 

7 

7 

7 

7 

7 

7 

8 

8 

8 

8 

8 

8 

8 

8 

8 

8 

8 

8 

8 

8 

8 

9 

9 

9 

9 

9 

9 

9 

9 

9 

9 

9 

9 

9 

9 

9 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

As  fast  as  the  checks  are  received  at  the  cashier's  desk  they 
are  checked.  If  one  of  the  clerks  should  sell  goods  to  a  friend, 
and  send  one  slip  to  the  packer,  but  destroy  the  cashier's  copy,  the 
fraud  would  be  detected,  as  the  next  slip  which  would  be  sent  in 
would  show  by  the  number  that  the  previous  one  was  missing.  The 
matter  could  be  investigated  immediately.  The  auditing  depart- 
ments of  different  stores  handle  the  detail  of  the  work  in  various  ways — 
which,  however,  are  about  the  same.  Some  stores,  after  they  prove 
that  there  are  no  slips  missing  by  checking  the  slips  by  the  serial 
numbers,  add  them  up  on  adding  machines.  As  some  stores  do  not 
care  for  a  list  of  the  slips,  they  use  a  non-listing  machine,  such  as  the 
comptometer.  Other  stores  add  the  sales  of  each  clerk  separately, 
and  add  die  totals  of  all  the  clerks  to  secure  the  total  sales.     The 


304 


BILLING   VXD  ORDER  RECORDING 


61 


total  sales  of  each  clerk  are  then  entered  on  a  statistical  sheet  ^vllich 
shows  a  comparison  of  the  total  daily  sales  of  each  clerk  for  the 
month,  as  shown  in  Table  II, 

The  slips  are  then  sorted  according  to  departments,  then  added 
again,  and  similar  information  written  on  statistical  sheets  with  the 
department  numbers  at  the  top,  instead  of  the  clerk  numbers.  The 
grand  totals  must  agree  to  prove  the  work. 

The  slips  are  then  sorted  according  to  customers.  If  Mrs. 
J.  B.  Jackson  has  bought  goods  in  three  different  departments,  the 
auditing  department  will  pin  the  three  slips  together  and  mark  the 
total  of  the  slips  to  be  charged  to  her  account  on  the  back  of  the 
under  slip.     If  there  are  twelve  bill  clerks  and  twelve  billing  ma- 

TABLE  II 
COMPARISON  OF  DAILY  SALES  OF  CLERKS 


Clerk  No. 


Total 

335  38 

492  53 

etc. 


Days 


etc. 


30  50 
56  74 

etc. 


55  45 

87  55 
etc. 


3 


47  70  35  35 
9  76  87  23 
etc.   etc. 


6 


56  78 
54  09 
etc. 


34  25 
19  89 
etc. 


40  56 
86  75 
etc. 


34  79 
90  52 
etc. 


chines,  all  the  slips  will  then  be  assorted  into  twelve  lots,  each  lot 
representing  the  number  of  accounts  taken  care  of  by  each  bill  clerk. 

Each  bill  clerk  receives  the  slips  in  alphabetical  order.  The 
monthly  folded  bills  are  arranged  in  the  same  order.  These  are  held 
in  binders — a  special  kind,  such  as  the  Tengwall,  being  used — from 
which  the  bills  can  })e  easily  and  ({uickly  removed.  Some  firms 
prefer  to  file  daily  in  vertical  files  the  current  mondily  bills,  uj)()n 
which  the  charges  are  Ix^'ing  made. 

Some  machines,  .such  as  the  Smith  Premier  and  the  Elliott-Fisher, 
have  a  carbon  roll  on  their  machines  for  manifolding  the.se  duplicate 
folded  Vjills  without  handling  the  carbon  paper.  These  attachments 
were  especially  designed  for  this  particular  work. 

After  the  operator  has  entered  the  charges  of  the  three  slips  for 
Mrs.  J.  B.  Jackson,  or  any  other  customer  having  more  than  one 


.^05 


r.2  BILLING  AND  ORDER  RECORDING 

slip  for  the  j)ivvii)us  day's  ])urcliases,  slu'  compares  the  total  she 
lius  placed  on  the  bill  with  the  total  marked  on  the  back  of  the  slips 
by  the  auditing  department. 

Fig.  25  shows  samples  of  folded  monthly  retail  bills.  The  black 
showing  under  the  top  sheet,  which  is  turned  over,  is  the  carbon  paper 
used  with  the  bills  when  made  on  machines  not  equipped  with  the 
carbon-roll  attachment.  Some  firms  place  the  carbon  paper  between 
the  sheets  at  the  beginning  of  the  month,  and  leave  it  there;  others 
place  the  carbon  paper  between  the  sheets  for  ever\'  charge  which 
is  made  to  the  bill. 

After  all  the  charges  iiave  been  made,  the  operator  adds  up  on 
the  adding  machine  the  totals  of  all  the  last  charges  on  the  various 
bills  to  which  charges  have  been  made  that  day.  This  total  must 
agree  with  the  amount  which  the  auditing  department  handed  over 
to  each  bill  clerk  to  be  entered  upon  these  bills.  The  Smith  Premier 
and  Elliott-Fisher  have  tally-strip  devices  w^hich  automatically  record 
the  total  of  each  charge  made  to  all  the  various  bills  each  day.  This 
paper  strip,  when  added  up,  must  agree  with  the  total  of  the  auditing 
department  figures. 

At  the  end  of  the  month,  about  the  26th,  most  firms  begin  to 
total  the  columns  of  the  bill.  The  final  total  of  each  bill  added  to 
the  total  of  every  other  bill  must  give  a  grand  total  ec[ual  to  all  the 
charges  for  the  month.  This  proves  that  each  bill  has  been  correctly 
added.  The  balance  due  from  the  previous  bills  is  then  brought 
forward,  and  any  payments  made  during  the  month  deducted,  and  the 
bill  footed.  All  credits  for  returned  goods  are  entered  during  the 
month  the  same  as  the  charges,  excepting  that  they  are  placed  in  a 
separate  column  provided  for  that  purpose,  and  deducted  at  the 
end  of  the  month  from  the  charges. 

Some  firms  post  the  total  charges  and  credits  for  the  month 
to  the  ledger  in  two  lump  sums.  Other  firms  prefer  to  post  the  total 
of  each  day's  charges  to  the  ledger  daily,  instead  of  letting  the  posting 
go  until  the  end  of  the  month.  This  is  a  matter  to  be  decided  from 
a  bookkeeping  standpoint.  If  the  bookkeepers  have  the  current 
month's  charges  in  the  ledger,  it  saves  referring  to  the  bills  at  the 
bill  clerk's  desk  for  information  or  the  current  month's  charges. 

After  the  bills  have  been  sent  out,  the  duplicates  are  filed  away. 
The  best  known  way  to  file  them  is  alphabetically;  each  customer's 

306 


Li.t-^'": 


K:mi^tKComN\ 


aBa""'"H<JMfc. 


Jo, 


f"- 


'^<!anfii. 


^ACo, 


'npcv, 


:'"  '■'-„ 


I     S  AY 


LAUt:  r.^.'iN   Brothi.r;; 


D-.i..^i,„ 


c^-  AUiv>  O 


Fig.  2.-,.      Monthly  Stalon.ei.ts  ..f  K.-tail  Dry  (i.x.ds  H.-ises 
Rr.minr/lnn   Tupewrrlcr  C<-. 


307 


/ 


c? 


(U  0) 


(    • 

1  II 

1   11 

a 

v_^ 

/  r 

z-^" 

0 

308 


BILLING  AXl)  ORDER  RECORDLXG 


65 


bill  for  the  various  months  together.  This  is  in  contrast  to  the  plan 
of  filing  each  month's  bills  away  separately.  If  it  is  wished  to  refer 
to  any  one  ])erson's  c-harges  for  a  given  number  of  months  it  is  neces- 
sary, under  the  latter  ])laii,  to  refer  to  several  binders. 

One  of  the  devices  which  did  more  to  permit  cylinder  machines 
to  do  billing  successfully  is  shown  in  Fig.  2(3.     Formerly,  when  two 


i'ib'.  27.     Kciuiiigtoii  Uilliiig  .Machines 


or  more  sheets  of  ])aj)er  were  inserted  in  a  cylinder  machin<>,  the 
small  feed  roll  wliicli  rests  against  die  large  rid)l)er  ))l;itcn,  fed  the 
under  ])iipers  at  a  dilVcrcnt  sjx'cd  llian  those  sliee(s  which  rested 
against  die  large  roll.  The  rcsnil  \v;is  ih.it  die  papers  were  fed  un- 
evenly into  die  machine.  When  removed,  it  was  imj)ossible  to  vv- 
place  them  in  the  .same  relation  in  which  diey  were  before. 

The  device!  11  nslni  ted  fnmishes  a  resting  j)lace  for  evenly  placing 
all  die  .sheets  in  the  machine  by  j)ressing  a  release  lever  which  draws 
the  feed  rolls  away  from  the  large  roll  until  the  papers  or  sheets  are 

30'J 


00  ]51IJJ.\(;  AND  ORDKK  UKCOHDIXC] 

proj)erly  plinvtl  in  the  iMjicliiiK'.     Startccl  i-vcnly,  tlicy  will  iiiv;iri;il)ly 
feed  evenly. 

This  is  of  particular  advanta^i'e  in  retail  dry  n^oods  hilling,  where 
a  sheet  is  placed  iii  and  out  of  a  machine  as  many  as  thirty  times  a 
month.  If  the  top  of  the  bill  is  each  time  started  from  the  same 
starting  point,  namely,  the  top  of  the  statement,  it  will  feed  correctly 
to  the  next  writing  point  on    the    statement   without  any  adjust- 


Fig.2S.     Smith  Premier  Di  y  (joods  Billing  Machine 

ment.  The  Remington,  Fig,  27,  and  Underwood  machines  are 
equipped  with  devices  for  the  same  purpose.  The  Smith  Premier, 
Fig.  28,  and  the  Elliott-Fisher  machines  are  equipped  with  rolls 
of  carbon  which  automatically  manifold  folded  monthly  bill  forms. 

DEVICES  OF  THE  FUTURE 

One  of  the  successful  devices  which  is  being  perfected  at  this 
time  is  a  combination  of  an  adding  machine  and  a  cylinder  billing 
machine  which  can  be  operated  as  a  combined  machine  or  sepa- 
rately as  two  machines,  and  may  be  actually  removed,  one  from 
another.  The  idea  is  to  have  a  platen  or  roll  which  can  act  as 
shuttle  between  the  typewriter  and  the  adding  machine.  By  press- 
ing a  })utton,  the  roll  travels  from  the  typewriter  to  the  adding 
machine.  This  scheme  has  the  same  advantage  as  has  the  farmer 
who  can  operate  his  horses  singly  or  in  pairs. 

The  adding  machine  people  have  been  experimenting  and  grad- 
ually increasing  the  ])rinting  capacity  of  their  machines.  They  are 
now  able  to  print  the  different  months  of  the  year  and  some  other 

310 


BILLING  AXD  ORDER  RF.CORDING 


67 


abbreviations  for  monthly  statement  work.  Further  developments 
can  be  expected  along  this  line.  Adding  machines  which  list  are  a 
very  important  factor  in  office  work  and  their  capacity  is  so  large  for 


Fig.  29.     .\ilding  aud  Subtracting  Machine  ComlMned  with  Cylinder  Billing  Machine 
Jicininytun    Ti/jx'wrilcr  Co. 

certain  classes  of  work  that  sj)ace  does  not  permit  of  detailed  treat- 
ment here. 

While  marvelons  inij)n)V(Mneiits  have  been  made  in  the  last  decade, 
the  next  one  promises  etpially  well,  esi)ecially  in  the  adding-machine 
line. 


311 


THE  SHIPPING  DEPARTMENT 


INTRODUCTION 

The  average  manager  of  a  business  has  but  a  rudimentary 
knowledge  of  traffic  affairs  as  they  relate  to  the  shipment  of  his  goods. 
He  does  not  know  that  he  is  receiving  the  lowest  rates  to  wliich  he 
is  entitled,  or  that  the  most  favorable  classification  is  applied  to  his 
shipments. 

A  large  percentage — probably  a  majority — of  the  concerns 
which  do  any  considerable  amount  of  shipping,  or  receive  a  large 
quantity  of  freight,  lose  annually  in  overcharges,  due  to  improper 
classifications,  defective  packing,  and  a  general  lack  of  knowledge 
of  the  subject,  a  much  larger  sum  than  would  be  required  to  pay  the 
salary  of  a  competent  traffic  manager.  There  are  so  many  intricate 
details  to  be  considered  in  the  shipping  problem,  that  the  subject 
requires  special  study,  and  shippers  whose  volume  of  business  is 
even  moderate  find  it  profitable  to  employ  a  traffic  manager. 

Not  every  shipper  is  doing  a  business  of  sufficient  volume  to 
warrant  the  employment  of  a  man  to  devote  his  entire  time  to  this 
question,  but,  in  the  organization  of  every  business  doing  even  a 
small  amount  of  shipping,  there  shonld  be  one  man  who  will  make  a 
study  of  traffic  matters.  lie  need  not  have  an  intimate  knowledge 
of  the  entire  subject  of  traffic  att'airs,  but  he  should  be  posted  on  all 
questions  that  have  a  bearing  on  the  shipment  of  the  goods  of  his 
house.  When  no  regular  traffic  manager  is  employed,  the  duties 
of  the  position  fall  on  the  shipj)ing  clerk;  h(>  is  the  logical  man  to 
make  a  study  of  the  subject. 

Considered  from  the  standpoint  of  his  knowledge  of  shi{)ping 
requirements,  classifications,  niatnier  of  packing,  and  the  applica- 
tion of  special  rates,  a  man  who  has  had  exj)erience  in  the  freight 
department  of  a  railroad  makes  the  most  successful  traffic  manager. 
Such  a  man  may  not  be  fitted  to  organize  and  handle  the  work  of 


313 


2  THE  SHIPPING  DEPARTMENT 

the  shipping  department  but,  in  a  concern  large  enough  to  require 
the  services  of  a  traffic  manager,  there  will  be  work  enough  to  war- 
rant the  employment  of  an  assistant  to  look  after  this  branch  of  the 
work. 

THE  SHIPPING  CLERK 

In  this  discussion  of  the  organization  of  the  shipping  depart- 
ment, the  shipping  clerk  will  be  considered  as  assuming  the  duties  of 
traflSc  manager,  as  well  as  those  that  usually  pertain  to  his  position. 
He  will  be  at  the  head  and  have  full  charge  of  the  department,  keep- 
ing such  records  as  may  be  called  for  by  the  business. 

It  is  the  duty  of  the  shipping  clerk  to  see  that  all  goods  are 
shipped  promptly,  packed  and  described  to  secure  the  most  favor- 
able rates,  and  properly  routed.  He  must  have  a  checking  system 
that  will  enable  him  to  locate  errors  and  to  know  that  all  goods 
called  for  by  an  order  have  been  shipped.  He  will  be  assisted  by 
such  packers,  checkers,  and  porters  as  may  be  required  to  handle 
the  work. 

The  packers  will  receive  the  goods  called  for  by  an  order  from 
the  stock  men,  and  will  pack  them  properly.  They  will  check  all 
goods  packed  against  the  order.  In  this,  they  will  be  assisted  by 
checkers,  who  check  the  goods  received  on  the  shipping  floor  and 
again  when  they  are  packed.  Discrepancies  must  be  reported  at 
once  and  adjusted  immediately. 

In  some  concerns,  the  shipping  clerk  is  also  the  stock  clerk,  in 
which  case  he  has  charge  of  the  actual  filling  of  the  orders.  He  is 
assisted  by  stock  men,  who  select  the  goods  and  assemble  the  orders 
under  his  direction. 

Like  the  head  of  any  other  department,  the  shipping  clerk  should 
have  full  control  of  his  department.  No  other  person  in  the  organi- 
zation should^be  permitted  to  make  shipments.  Concerns  have  been 
found  in  which  it  was  the  custom  for  different  employes  to  ship 
small  articles  without  the  knowledge  of  the  shipping  clerk.  Invari- 
ably, this  leads  to  mistakes  and  results  in  blame  being  wrongfully 
placed  on  the  shoulders  of  the  shipping  clerk.  And  even  greater 
damage  is  done  in  the  disruption  of  the  organization. 

Information  Required.  The  shipping  clerk  should  be  fully 
informed  on  all  traffic  questions  that  affect  the  shipment  of    the 

314 


THE  SHIPPING  DEPARTMENT  3 

goods  of  his  house.  Of  first  importance  is  a  knowledge  of  classifica- 
tions, that  he  may  know  that  his  shipments  are  placed  in  the  lowest 
classification  to  which  they  are  entitled.  Copies  of  the  classifications 
can  be  obtained  from  any  local  freight  office. 

In  this  country  there  are  three  principal  classifications,  these 
being  the  official,  governing  the  eastern  territory;  western,  governing 
western  territory;  southern,  governing  southern  territory.  There 
are  also  a  few  special  classifications  governing  classifications 
in  certain  states.  While  some  attempt  at  uniform  classifica- 
tion has  been  made,  the  several  classifications  show  many  vari- 
ations, the  same  article  taking  different  classifications  in  diflierent 
territories. 

When  classifications  are  received,  they  must  be  carefully  studied 
by  the  shipping  clerk  that  he  may  really  understand  to  what  classi- 
fications his  goods  are  entitled.  It  might  be  supposed  that  a  certain 
article  or  class  of  goods  would  always  take  the  same  classification 
but  this  is  not  the  case;  other  questions  than  the  name  have  a  bearing 
on  the  question. 

The  manner  of  packing  goods  very  often  determines  the  classi- 
fication. Certain  articles  are  placed  in  a  lower  classification  if  boxed 
than  they  would  be  if  crated.  This  is  specially  true  of  goods  that 
are  liable  to  damage  in  transit.  Many  shippers  make  a  practice  of 
crating  goods  because  it  can  be  done  more  cheaply  than  boxing, 
without  realizing  that  the  difference  in  packing  cost  is  more  than 
offset  by  the  increase  in  the  freight  rate. 

The  classification  is  also  sometimes  determined  by  the  manner 
in  which  the  goods  are  described.  It  is  necessary,  therefore,  to  study 
the  classifications  with  reference  to  the  description  that  will  insure 
the  most  favorable  rate.  However,  false  descriptions  made  for  the 
purpose  of  securing  a  lower  classification  must  be  avoided,  as  the 
Interstate  Commerce  Act  provides  a  heavy  penalty  for  such  falsifica- 
tion. But  there  may  be  several  different  descriptions  which  legiti- 
mately apply  to  a  given  article,  each  placing  it  in  a  different  class. 
A  case  in  point:  The  western  classification  made  no  provision  for 
filing  cabinets  in  carload  lots,  with  the  result  that  a  carload  ship- 
ment, described  as  filing  cabinets,  took  the  rate  provided  for  less 
than  carload  lots.  But  the  same  classification  gave  a  lower  classi- 
fication, consequently  a  lower  rate,  on  office  furniture  in  carload  lots. 

3ir, 


4  THE  SHIPPTXG  DEPARTMENT 

Filing  cabinets  bein*;  olHtr  furniture,  it  was  (.Mitiicly  legitimate  to 
describe  such  sliipnients  as  ollice  furniture. 

Another  illustration  of  the  effect  of  description  on  the  classifica- 
tion is  found  in  shipments  of  carriages.  The  classification,  and  con- 
sequent rate,  on  this  commodity  is  based  on  the  space  that  it  will 
require,  rather  than  on  the  rate.  If  shipped  knocked  down  and 
properly  crated,  with  the  dimensions  stated  on  the  shipping  bill,  a 
carriage  takes  a  lower  classification  than  if  shipped  assembled,  or 
if  the  dimensions  of  the  crate  are  omitted. 

These  illustrations  are  sufficient  to  show  the  importance  of  a 
thorough  knowledge  of  the  provisions  of  the  different  classifications. 
The  shipping  clerk  who  would  give  the  best  service  to  his  house 
should  make  a  study  of  this  subject,  even  if  he  is  obliged  to  take  the 
classifications  home  and  study  them  at  night.  Every  shipper  should 
see  that  his  shipping  clerk  is  supplied  with  copies  of  classifications 
governing  the  territory  in  which  he  is  doing  business,  and  give  him 
an  opportunity  to  learn  their  provisions  in  respect  to  the  commodities 
which  he  ships. 

Class  Rates.  A  class  rate,  as  the  name  implies,  is  one  based  on 
the  classification.  All  commodities  are  divided  into  classes,  six  in 
number,  and  all  commodities  of  the  same  class — with  certain  excep- 
tions, explained  later — take  the  same  rate.  Schedules  of  rates  be- 
tween given  points,  based  on  the  class,  are  prepared  by  the  classifica- 
tion committees,  but  before  being  put  into  effect,  they  must,  in  case 
they  apply  between  points  in  different  states,  be  submitted  to  the 
Interstate  Commerce  Commission  for  approval.  While  not  a  rate- 
making  body,  the  commission  is  a  rate-governing  body,  constituting, 
in  a  certain  sense,  a  board  of  arbitration  between  shippers  and  trans- 
portation companies. 

The  rates  being  based  on  the  classes — the  higher  the  class,  the 
higher  the  rate.  To  determine  the  rate,  it  is  first  necessary  to  find 
the  classification;  reference  to  the  rate  schedule  will  show  the  rate 
for  each  class. 

Commodity  Rates.  A  commodity  rate  is  one  applying  to  a 
special  commodity,  between  definitely  siateQ  pomis.  Commoditv 
rates  are  established  by  the  railroads  to  meet  some  special  conditioii- 
and  with  these  the  classification  committees  have  nothing  to  Sc 

A  commodity  rate  does  not  apply  to  articles  not  named  in  the 

316 


THE  SHIPPING   DEPARTMENT  o 

tariff  even  though  they  are  of  a  shnilar  nature,  nor  do  they  api)ly 
between  points  not  specified  in  the  special  tariti".  A  commodity  rate 
is,  in  elTect,  a  special  rate;  it  offers  special  inducements  for  the  ship- 
ment of  certain  commodities,  but  is  not  intended  to  favor  any  one 
shipper.  The  commodity  rate  is  for  the  benefit  of  all  shippers  of  the 
commodity  named. 

The  volume  of  traffic  is  the  chief  factor  in  establishing  rates, 
either  regular  or  special.  It  is  an  especially  important  factor  in 
establishing  a  commodity  rate.  In  a  given  community,  some  one 
commodity  may  be  produced  in  large  quantities.  Perhaps  it  is  a 
raw  material  which  must  be  transported  to  certain  manufacturing 
centers.  To  encourage  the  development  of  the  industry,  thereby 
creating  a  large  volume  of  traffic,  the  railroads  leading  from  the 
point  where  the  traffic  originates  establish  a  commodity  rate  to  other 
points,  where  the  raw  material  can  be  used  to  ad\'antage  by  the 
manufacturer.  Or,  perhaps,  important  manufacturers  are  located 
on  other  roads,  in  which  case  connecting  lines  join  with  the  originating 
road  and  issue  what  is  known  as  a  jo//;/  tariff.  This  enables  the  pro- 
ducer to  deliver  his  raw  material  to  the  manufacturer  on  faxorable 
terms,  when  to  pay  class  rates  might  compel  him  to  abandon  the  en- 
terprise, with  a  consequent  loss  of  traffic  to  the  railroads.  This 
discriminates  against  no  one,  since  every  shipper  of  the  ])articular 
commodity  between  the  ])oints  named  is  entitled  to  the  s])ecial  com- 
modity rate. 

Frequently,  however,  a  commodity  rate  exists  l)ct\veen  certain 
points  which  might,  under  certain  conditions,  be  taken  ad\antage 
of  by  a  shipper  located  at  a  point  outside  of  those  named  in  the 
commodity  tariff .  For  illustration,  a  manufacturer  in  Peoria,  Ilhnois, 
is  shipping  a  commodity  on  which  a  special  rate  is  granted  between 
Chicago  and  Milwaukee,  })ut  takes  a  class  rate  from  the  ])oint  of 
shipment.  lie  makes  a  siiipment  to  Milwaukee  and  pays  the  through 
class  rate  provided  from  t\\v  point  of  shipment,  when  by  |)roi)('r  bill- 
ing he  would  ha\e  j)aid  the  class  rate  to  Chicago,  and  secured  the 
benefit  of  the  commodity  rate  from  that  ])oint  to  Milwaukee.  A 
lack  of  knowledge  of  commodity  rates  in  ell'ect  in  the  inainifneturer's 
territory  has  resulted  in  an  uimecessary  e\])ense     a  loss  of  money. 

The  claim  might  be  made  that  the  billing  clerk  at  the  local 
freight  office  should  have  given  the  shipjici-  (lie  benelit  of  the  lowest 

317 


6  THE  SIIIPPIXG  DEPARTMENT 

rate.  But  lie  will  fall  back  on  the  classification  and  be  prepared  to 
show  that  he  has  given  the  only  rate  quoted  on  shipments  from 
Peoria  to  Milwaukee,  which  is  the  class  rate.  It  is  no  part  of  his 
duties  to  keep  posted  on  coriimodity  rates  granted  by  another  road, 
"((•hile  it  is  distinctly  to  the  interest  of  the  manufacturer  to  know  of 
the  existence  of  all  such  rates  applying  to  his  product. 

Freight  Tariffs.  The  Interstate  Commerce  Act  provides  that 
two  copies  of  every  freight  tariff  issued  by  th(>  railroads  shall  be  placed 
on  file  at  each  freight  office,  for  the  inspection  of  the  public.  Since 
the  rates  must  be  made  public,  the  railroads  do  not  object  to  supply- 
ing shippers  with  copies  of  the  tariffs  applying  to  their  product. 
Through  the  local  freight  agent,  copies  of  all  tariffs  applying  from 
the  point  of  shipment  can  be  obtained. 

It  has  been  shown  that,  in  the  case  of  commodity  rates,  copies 
of  tariffs  from  the  point  of  shipment  are  not  always  sufficient.  It  is 
necessary  to  obtain,  from  connecting  lines  reaching  the  territory  in 
which  the  trade  of  the  house  lies,  copies  of  all  special  tariffs  apply- 
ing to  the  commodities  shipped.  The  freight  departments  of  all 
railroads,  through  their  solicitors,  make  a  practice  of  supplying 
copies  of  all  regular  and  special  tariffs  to  all  large  shippers  on  their 
lines,  and  to  shippers  on  connecting  lines  who  are  in  a  position  to 
divert  traffic  to  them.  Any  shipper  who  has  been  overlooked,  should 
write  to  the  freight  departments  of  all  lines  in  his  territory  asking  to 
be  placed  on  the  mailing  list  to  receive  copies  of  all  tariffs  affecting 
his  product.  By  doing  this,  he  will  secure  copies  of  all  such  tariffs 
as  soon  as  issued. 

The  subject  of  commodity  rates  is  one  of  the  most  vexing  with 
which  the  shipping  clerk  has  to  deal,  as  it  is  also  one  of  the  most  im- 
portant. To  compile  a  complete  file  of  special  tariffs,  involves  close 
study  and  much  labor.  But  when  once  done,  it  can  be  kept  up-to- 
date  with  little  difficulty,  and  the  saving  resulting  will  far  outweigh 
the  cost. 

Filing  Tariffs.  The  manner  in  which  freight  tariffs  coming 
into  the  office  are  filed  is  important,  for  unless  properly  filed  and 
indexed  they  are  likely  to  be  of  little  value.  The  filing  system  must 
provide  for  quickly  locating  any  tariff,  and  for  locating  all  tariffs 
that  may  have  a  bearing  on  a  particular  case. 

In  the  average  shipping  clerk's  office,  it  is  not  uncommon  to 

318 


THE  SHIPPING  DEPARTMENT  7 

find  the  tariffs  dumped  into  a  drawer,  without  regard  to  their  order, 
or  hung  on  a  hook  on  the  wall.  When  a  rate  is  wanted,  it  is  necessary 
to  search  through  the  tariffs  until  one  giving  the  rate  is  found.  The 
chances  are  that  the  first  rate  found  will  be  used,  regardless  of  the 
fact  that  another  tariff  shows  a  special  and  lower  rate. 


i  BURL 


ly^ 


Fig.  1.     Vertical  File  of  Indexed  Folders  for  Railroad  Tariffs 


A  very  satisfactory  file  for  freight  tariffs  is  the  vertical  file,  and 
one  drawer  will  hold  all  of  tiie  tariffs  required  by  the  average  shipper. 
If  a  two-drawer  cabinet  is  provided,  the  shipping  clerk  will  usually 
find  other  uses  for  the  extra  drawer. 

Each  railroad  whose  tariffs  are  on  file  should  be  assiirned  a 
folder,  and  the  folders  should  be  filed  alphabetically  under  the  names 
of  the  railroads,  as  shown  in  Fig.  1.  All  tariffs  from  one  railroad 
should  be  filed  in  the  folder  assigned  to  that  road,  and  arranged 
according  to  their  numbers.  All  railroads  number  their  tariffs  and, 
in  correspondence,  refer  to  them  by  number.  Reference  to  the  tariffs 
will  be  facilitated,  therefore,  if  those  of  each  railroad  are  kept  in 
numerical  setjuence. 

Loose-leaf  binders  are  sometimes  used  for  filing  tariffs,  but  not 
all  tariffs  are  in  proper  shape  for  punching  to  fit  the  binder.     Another 


319 


8 


THE  SHIPPING  DEPARTMENT 


disadvantage  in  using  a  loose-leaf  binder  is  that  freight  tariff's  are  not 
uniform  in  size,  resulting  in  an  awkward,  unwieldy  book.  For  these 
reasons,  the  vertical  file  is  found  more  satisfactory. 

The  Index.  Since  the  tariff  folders  are  filed  in  alphabetical 
sequence,  no  index  is  required  to  locate  the  tariffs  of  a  given  road, 
but  a  cross-index  to  locate  all  tariffs  that  apply  to  a  given  point,  is  a 
necessity.  This  index  should  be  in  card  form,  a  card  being  used  for 
each  town  to  which  the  house  ships,  or  is  likely  to  ship,  its  products. 

I  PENNA.1 


^ai_8rw.i ■■ 

Town                                                                via 

RAILROADS 

TARIFF  NO. 

CLASS  OR 
COMMODITV 

REMARKS 

Fig.  2.     Cross-Index  to  Tariff  File 

A  very  satisfactory  form  of  card  for  this  cross-index  is  shown 
in  Fig.  2,  which  also  shows  the  manner  of  filing.  At  the  head  of  the 
card  is  the  name  of  the  town,  and  the  name  of  the  railroad  on  which 
it  is  located.  Below  the  heading,  the  first  column  shows  the  names 
of  all  railroads  issuing  tariffs  to  the  town  in  question,  whether  or  not 
the  town  is  located  on  the  road.  Following  this  are  columns  for  the 
number  of  the  tariff  and  for  either  commodity  or  class  rates.  These 
cards  are  filed  in  the  same  manner  as  the  tariff  folders — alphabetically 
by  names  of  the  railroads.  A  guide  card  is  provided  for  each  road 
and  all  cards  representing  towns  on  that  road  are  filed  in  alphabetical 
order  behind  the  guide  card. 


320 


THE  SHIPPING  DEPARTMENT  9 

Suppose  a  rate  is  wanted  from  a  point  on  the  Delaware,  Lacka- 
wana  &  Western,  to  a  point  on  the  Burlington.  Reference  to  the 
Burlington  tariffs  does  not  give  the  rate,  for  the  reason  that  the  Bur- 
lington does  not  issue  tariffs  from  points  on  the  D.  L.  &  W.,  but 
reference  to  the  card  shows  that  four  roads  issue  tariffs  from  Buffalo 
to  Burlington  points,  one  of  them  being  a  commodity  tariff.  Refer- 
ence to  the  commodity  tariff  shows  that  the  special  rate  applies  from 


To                                                                            Via 

FROM 

|5T  CLASS 

2ND  CLA55 

3Rt)  CLASS 

4-TH  CLASS 

5TH  CLASS 

6TH  CLASS 

. 

Fig.  3.     Card  for  Class  Rates 

a  point  in  Ohio  to  Chicago,  a  connecting  point  with  the  Burlington. 
By  proper  routing,  this  special  rate  can  be  taken  advantage  of,  class 
rates  applying  the  balance  of  the  distance.  Without  the  index,  it 
would  be  necessary  to  look  through  several  folders,  with  die  possi- 
bility that  the  special  tariff  might  be  overlooked. 

Condensed  Rate  File.  A  condensed  rate  file  covering  a  definile 
territory  will  prove  a  convenience  to  most  shippers.  The  trade  of 
most  houses  is  confined  to  a  certain  definite  and  rather  limited  ter- 
ritory. A  manufacturer  may  make  an  occasional  shipment  to  a 
point  outside  of  his  regular  territory,  but,  as  a  rule,  his  shipments 
will  be  confined  within  certain  limits.  This  is  even  more  true  of 
the  jobber  and  tiie  wholesaler. 

If  a  special  rate  file,  covering  the  particular  territory  in  which 
the  shipper's  trade  lies,  is  prepanjd,  it  will  be  found  convenient  for 
reference,  and  will  save  consulting  the  tariff  files  whenever  a  rate  is 


321 


U) 


THE  SHIPPING  DEPARTjNIENT 


wanted.  Such  a  file  can  be  arranged  on  cards,  or  in  a  small  loose- 
leaf  book.  One  card  or  sheet  should  be  used  for  each  town,  the  name 
of  the  town  being  written  at  the  head  of  the  card. 

The  card  should  show  the  rates  for  all  classes  from  the  shipping 
point  to  the  destination,  as  well  as  the  route.  It  may  be  necessary  to 
record  rates  from  more  than  one  shipping  point.  A  manufacturer 
may  have  two  or  more  shipping  points,  and  it  is  important  to  know 


Article 

HOW  PACKED 

CLASS 

CLASSIFICATIONJ, 

REMARKS 

Fig.  4.     Card  Index  for  Classiflcatious 

from  which  points  he  can  secure  the  most  favorable  rates.  It  is 
also  advisable  to  include  the  shipping  points  of  the  chief  competitors, 
that  they  may  be  given  due  consideration  in  meeting  competition. 

Fig.  3  shows  the  form  of  card  for  this  rate  file.  The  cards 
should  be  filed  alphabetically,  and  it  is  w^ell  to  include  cards  for  some 
of  the  principal  towns  outside  of,  but  convenient  to,  the  regular  ter- 
ritory. The  rates  for  the  different  classes,  rather  than  on  specific 
articles,  are  given  for  the  reason  that  the  classification  is  more  likely 
to  change  than  the  rate.  If  the  rate  on  a  certain  article  is  given, 
and  the  classification  of  that  article  is  given,  should  the  classification 
of  that  article  be  changed,  it  would  be  necessary  to  rewrite  the  entire 
index.  It  is  much  less  difficult  to  change  the  record  of  the  classifica- 
tion of  one  article  than  to  revise  all  of  the  rates. 

Classification  Index.  For  convenient  reference,  the  shipping 
clerk  should  prepare  an  index  showing  the  classification  of  all  articles 


322 


THE  SHIPPING  DEPARTMENT 


n 


hat  he  is  obliged  to  ship.  This  classification  index  should  be  on 
cards  or  in  loose  leaf,  whichever  is  used  for  the  rate  file.  One  sheet 
is  used  for  each  article,  the  name  of  the  article  being  written  at  the  top. 
The  record  should  show  how  the  article  is  packed,  the  class, 
and  the  classification  in  which  it  is  found.  As  has  been  stated,  more 
than  one  class  may  apply  to  a  given  article,  depending  on  the  manner 


Town 

ARTICLE 

HOW  PACKED 

FROM 

RATE 

TARIFF  NO. 

R.  R. 

Fif?-  5.     Card  for  Commodity  Rates 

of  packing;  an  article  may  take  the  first-class  rate  if  boxed,  or  double 
first-class  if  crated.  In  such  cases,  both  classes  with  the  manner 
of  packing  should  be  shown. 

These  classification  sheets  should  be  filed  alphabetically  in  the 
file  used  for  the  rate  cards,  and  they  should  be  printed  on  stock  of  a 
different  color.  Most  shipper's  will  need  but  a  few  of  these  sheets 
as  the  number  of  articles  shipped  l)y  one  house  is  small,  as  a  rule. 
If  a  large  number  of  articles  is  shipped,  the  classification  index  is  of 
even  greater  importance.  A  suitable  form  for  this  index  is  shown  in 
Fig.  4. 

Commodity=Rate  File.  When  any  par(  of  (lie  goods  shij)pe(l  are 
subject  to  commodity  rales,  u  file  of  commodity  rates  is  fully  as  im- 
portant as  class  rates.  A  commodity-rate  file  is  arranged  on  similar 
lines  to  the  file  of  class  rates.  A  card  or  sheet  is  used  for  each  town 
to  which  commodity  rates  apply,  and  the  cards  are  filed  alphabetically 
by  names  of  towns.  These  cards  can  be  filed  with  the  class  rates, 
but  a  distinctive  color  should  be  used. 


323 


12  TTIK  SIIIPPTXn  DEPARTMEXT 

The  m-onl  should  <;iv(.'  (he  iiaiiu's  of  tlie  artick-s  taking  com- 
modity rates,  manner  of  packing,  the  point  from  which  the  rate 
applies,  the  rate,  tlie  number  of  the  tariff,  and  the  name  of  the  issuing 
railroad.  On  the  line  below  the  name  of  the  town  appears  the 
caption,  see  also.  This  is  for  the  name  of  some  other  point  to  which 
a  commodity  rate  applies.  Boonie,  Iowa,  for  instance,  may  not 
be  a  commodity  point,  though  a  special  rate  from  Chicago  to  Clinton 
is  in  effect.  The  Boone  card  would  refer  to  Clinton,  and  the  card 
for  that  town  would  show  the  rate.  Fig.  5  shows  a  form  for  com- 
modity rates. 

To  compile  such  a  record  of  rates  as  has  been  described,  requires 
an  initial  expenditure  of  much  labor,  but  is  a  profitable  investment. 
^^'^len  once  compiled,  changes  can  be  recorded  with  little  troul)le. 
These  files  will  always  be  valuable  for  reference,  not  alone  to  the  ship- 
ping clerk  but  to  the  sales  manager  and  the  purchasing  agent  as  well. 

A  comprehensive  knowledge  of  classifications  and  rates  will 
prove  valuable  not  only  to  the  shipper,  but  to  the  receiver  of  freight. 
It  will  save  any  merchant  many  dollars  in  freight  charges  on  goods 
purchased  f.  o.  b.  point  of  shipment.  The  shipper  may  not  pack 
his  goods  in  a  manner  to  secure  the  lowest  rate,  or  he  may  not  give 
the  proper  description  in  the  shipping  bill.  If  his  attention  is  called 
to  the  matter  by  a  customer,  he  probably  will  make  the  necessary 
changes  in  his  methods. 

Even  the  proprietor  of  a  small  retail  business  will  find  a  study 
of  this  subject  a  paying  investment.  The  writer  has  knowledge  of 
a  case  in  which  the  owner  of  a  general  store  saved  some  -SI  65.00  in 
one  year  by  carefully  checking  every  freight  bill  received,  making 
claims  for  overcharges,  and  watching  the  packing  and  routing  of 
his  goods.  Surely  that  amount  would  be  worth  saving,  even  to  a 
house  transacting  a  much  larger  volume  of  business. 

Routing  Shipments.  One  of  the  most  important  duties  of  the 
shipping  clerk  is  the  proper  routing  of  his  shipments.  Like  classi- 
fications and  rates,  the  subject  requires  careful  study.  In  too  many 
cases  this  subject  receives  little  attention,  but  by  exercising  care  in 
routing  shipments,  the  shipping  clerk  can  be  of  material  assistance  to 
the  sales  department,  and,  incidentally,  to  the  customers  of  his  house. 
Routing  frequently  affects  the  rate.  It  might  appear  logical  to 
suppose  that  the  rate  between  two  given  points  would  be  the  same, 

?2J 


THE  SIIIPPIXG  DEPARTMENT  13 

regardless  of  the  route;  but  this  is  uot  the  case.  Of  two  routes  to  a 
given  point,  one  may  be  longer  than  the  other.  If  shipping  and 
destination  points  happen  to  be  in  different  states,  the  provision  of 
the  Interstate  Commerce  Act  which  forbids  a  higher  rate  for  a  short 
haul  than  for  a  long  haul  comes  into  play.  Similar  provisions  apply- 
ing to  local  shipments,  are  found  in  the  laws  of  certain  states.  In 
Iowa,  for  instance,  such  a  provision  covers  the  transportation  of 
passengers  as  well  as  freight.  One  railroad  is  not  permitted  to  meet 
the  competition  of  another  having  a  shorter  route  between  two  points, 
but  must  base  its  rate  on  the  mileage.  All  of  which  goes  to  show  the 
necessity  of  considering  the  length  of  the  haul  in  routing  shipments. 

The  above  conditions  apply  especially  to  shipments  taking  class 
rates,  but  when  goods  which  take  commodity  rates  are  to  be  shipped, 
the  question  of  routing  is  of  even  greater  importance.  It  has  been 
shown  that  a  commodity  rate  may  be  in  effect  between  two  points 
on  one  road,  or  two  or  more  roads  may  have  issued  a  joint  tariff 
which  can  be  taken  advantage  of.  The  question  of  commodity  rates, 
therefore,  has  a  most  important  bearing  on  the  routing  of  shipments. 

Another  factor  that  has  a  bearing  on  the  routing  is  basing  points, 
which  necessitates  a  knowledge  of  the  points  on  which  rates  are  based. 
In  the  territories  governed  by  the  different  classifications,  certain 
common  points  are  used  for  basing  rates.  On  shipments  from  the 
central  states  to  southern  territory,  rates  are  based  on  Ohio  River 
points,  while,  to  western  territory,  they  are,  in  many  cases,  based  on 
Missouri  River  points.  Class  rates  from  Chicago  to  all  Missouri 
River  points  are,  as  a  rule,  the  same  over  all  roads,  but,  to  points 
beyond  the  IMissouri  River,  rates  may  vary  from  the  different  basing 
points;  that  is,  the  rate  from  Omaha  to  a  western  point  may  be  less 
than  from  Kansas  City,  though  the  rate  to  these  basing  points  is  the 
same. 

The  alert  shipping  clerk  will  learji  the  basing  points  in  the 
territory  to  which  he  is  shipping  goods — which  he  can  do  by  consult- 
ing local  freight  officials — and  will  thcTi  secure  tarill's  from  tlicse 
basing  points  to  the  towns  ho  wishes  to  reach.  This  information  he 
will  incorporate  in  his  rate  files. 

Not  least  of  the  factors  which  should  be  considered  in  routing 
shipments,  is  the  accommodation  of  the  customer.  It  is  frequently 
the  case,  that  of  two  roads  entering  a  town,  the  freight  house  of  one 

.325 


14  THE  SIITPPING  DEPARTMENT 

is  more  conveniently  located  for  the  shipper.  Rates  being  equal, 
shipments  should  be  routed  over  the  road  from  which  the  customer's 
cartage  charges  are  the  lowest.  Or  the  customer  may  have  a  side- 
track to  his  warehouse  from  one  road,  which  makes  no  switching 
charge,  while  on  every  car  shipped  over  another  road  a  switching 
charge  must  be  paid.  This  charge  may  offset  an  advantage  in  rates. 
It  always  pays  to  accommodate  the  customer.  When  the  wishes  of 
the  customer  are  knowm,  they  should  be  grantei^,  within  reasonable 
limits,  even  though  it  involves  extra  expense. 

FILLING  ORDERS 

In  all  large  concerns  the  filling  of  orders — that  is,  the  assembling 
of  the  goods — is  done  by  the  stock  department.  The  subject  is  here 
discussed  in  connection  with  the  shipping  department  for  the  reason 
that  in  many  houses  all'orders  are  assembled  under  the  direction  of 
the  shipping  clerk;  in  others  he  is  also  the  stock  keeper  or  stores  clerk. 

This  discussion  refers  more  especially  to  the  filling  of  orders  in 
a  jobbing  house,  or  a  manufacturing  business  which  carries  goods  in 
stock.  It  does  not  refer  to  those  manufacturing  enterprises  whose 
orders  are  for  goods  to  be  manufactured. 

As  a  rule,  all  orders  of  a  jobbing  house  should  be  filled  the  day 
they  are  received.  If  they  cannot  be  filled  complete,  they  should  be 
filled  as  nearly  as  possible,  and  missing  articles  handled  as  explained 
later  under  the  subject  of  Back  Orders. 

There  is  a  great  chance  for  time  saving  in  most  houses  in  filling 
orders.  In  many  houses,  too  little  consideration  is  given  to  the  hand- 
ling of  goods  in  a  manner  that  will  save  time  in  assembling  orders. 
Lack  of  a  logically  planned  system  is  responsible  for  much  of  the  con- 
fused and  confusing  rush  in  the  average  shipping  room,  about  the 
time  that  orders  should  be  delivered  to  the  transportation  companies. 

Here  is  a  case  in  point  which  came  under  the  observation  of  the 
writer.  A  certain  jobbing  house,  handling  drugs  and  druggists' 
sundries,  occupied  a  five-story  building.  On  each  floor  there  was 
a  stock  room  in  charge  of  a  stock  man,  who,  with  the  aid  of  such 
helpers  as  he  needed,  kept  the  stock  in  proper  shape,  and  assembled 
the  goods  required  from  his  floor  to  fill  orders. 

In  the  drug  business,  the  average  order  received"  from  a  retailer 
calls  for  a  large  number  of  articles — it  is  made  up  of  small  items. 

326 


THE  SHIPPING  DEPARTMENT  15 

This  is  especially  true  of  orders  brought  in  by  the  traveling  sales- 
men. As  a  consequence,  the  larger  part  of  the  orders  received  by 
this  house  called  for  goods  from  practically  every  floor. 

The  custom  was  to  send  orders  first  to  the  floor  farthest  from 
the  shipping  room — that  is,  to  the  fifth  floor.  The  stock  man  as- 
sembled the  goods  required  from  his  floor,  placed  them  in  a  basket 
with  the  order,  and  sent  them  down  to  the  fourth  floor.  Each  order 
went  from  floor  to  floor  and  finally  reached  the  shipping  room — 
perhaps  being  held  an  hour  on  one  floor  for  a  single  article  because 
of  other  orders  ahead. 

A  result  of  this  method  was  that,  in  the  morning,  the  stock 
men  on  the  upper  floors  were  rushed,  while  those  on  the  lower  floors 
had  no  orders  to  fill,  except  those  calling  for  goods  from  one  floor 
only.  In  the  afternoon,  ,the  conditions  were  reversed.  Then  the 
men  on  the  upper  floors  had  nothing  to  do  but  put  their  stocks  in 
shape;  those  on  the  lower  floors  were  busy  filling  orders.  These 
conditions  were  not  particularly  objectionable  so  far  as  the  stock 
men  were  concerned,  as  they  were  profitably  employed,  when  not 
filling  orders,  in  caring  for  their  stocks;  but  in  the  shipping  room 
great  confusion  resulted.  Goods  required  to  fill  the  day's  orders  did 
not  begin  to  come  into  the  shipping  room  until  late  in  the  day,  and 
then  they  came  with  a  rush.  Hurried  packing  resulted  in  mistakes, 
caused  disputes,  and  lost  good  customers. 

To  overcome  the  difficulty,  a  new  plan  which  worked  admirably 
was  perfected.  A  chart  was  prepared,  along  the  lines  of  the  one 
shown  in  Fig.  G.  On  this  chart,  a  section  was  set  aside  for  each 
floor,  and  in  the  first  colunm  the  classes  of  goods  stored  on  each 
floor  were  listed.  In  the  next  two  columns  a  few  of  the  articles 
in  each  class — enough  to  serve  as  a  guide — were  listed,  and  the  last 
column  showed  the  floor  B,  meaning  tlie  basement.  On  this  chart, 
the  location  of  any  class  of  goods  could  be  seen  at  a  glance,  aiul  in 
case  of  doubt  al)out  the  class  to  which  an  article  belougeil,  reference 
to  the  catalogue  issued    by  the  firm  gave  (he  desired  infoi-madoii. 

A  copy  of  the  chart  was  given  to  the  order  clerk,  wlio  entered 
all  orders  on  a  billing  tyj)ewrifer.  In  entering  the  order  all  articles 
were  grouped  by  floors,  starling  at  the  fifth  floor.  Below  (he  list  of 
articles  from  each  floor  a  space  was  left,  the  first  entry  for  the  next 
floor  being  on  the  second  line  below. 

327 


FLOOR     CHART 

CLASS 

ARTICLES 

ARTICLES 

FLOOR 

51^ 

I 

4id 

35^ 

' 

pND 

151 

B 



Fig.  6.     Floor  Chart  for  the  Classification  of  Stoc-k 
328 


THE  SHIPPING  DEPARTMENT  17 

Two  copies  of  the  order  were  provided  for  the  use  of  the  shipping 
clerk.  AMien  the  orders  reached  his  desk,  he  cut  one  copy  into  parts, 
as  represented  by  the  floors  from  which  goods  were  to  come.  After 
entering  the  order  number  on  the  margin  of  each,  he  sent  these  sec- 
tions to  the  stock  men.  Each  man  assembled  the  goods  required  from 
his  floor  and  sent  them,  with  his  section  of  the  order  blank,  directly 
to  the  shipping  room.  Here  they  w'ere  checked  against  the  shipping 
clerk's  copy  of  the  order,  and,  as  soon  as  all  sections  had  been  filled, 
the  order  was  ready  for  packing.  This  resulted  in  distributing  the 
work  more  evenly,  and  kept  the  goods  coming  regularly  to  the  shipping 
room. 

Another  method  of  accomplishing  the  same  result  is  to  make 
as  many  copies  of  the  order  as  there  are  floors,  the  complete  order 
being  sent  to  each  stock  man,  who  fills  only  his  part.  An  advan- 
tage of  dividing  the  order  sheet,  as  explained,  is  that  the  stock  men 
have  no  knowledge  of  the  names  of  customers.  This  prevents  a 
stock  man  from  taking  a  list  of  the  firm's  customers  to  another  house 
— an  occurrence  which  is  not  entirely  unknown. 

Back  Orders.  Most  concerns  find  it  impossible  to  fill  all  orders 
completely;  there  are  occasional  shortages  in  every  house.  In  such 
cases,  it  is  the  usual  custom  to  fill  all  orders  as  nearly  as  possible, 
and  forward  the  items  that  are  short  as  soon  as  they  are  in  stock, 
or  with  a  later  shipment. 

The  possilnlity  of  these  items  being  overlooked  must  be  pro- 
vided against,  and  this  is  done  by  entering  all  items  that  are  short 
on  a  new  order.  This  is  known  as  a  back  order.  The  back  order 
should  be  made  in  duplicate  and  should  be  printed  on  stock  of  some 
distinctive  color  that  will  not  be  confused  with  the  regular  order 
blanks.  For  convenience  in  filing,  it  should  also  be  made  the  same 
size  as  the  regular  orders. 

If  the  number  of  back  orders  is  very  large,  a  separate  series  of 
order  numbers  is  used,  but  most  concerns  do  not  have  a  sufficient 
number  of  such  orders  to  make  this  necessary.  The  more  usual 
custom  is  to  give  the  back  order  the  same  number  as  the  original  of 
which  it  is  a  part. 

Of  the  two  copies  of  the  back  order,  one  goes  to  the  shipping 
clerk,  while  the  other  is  kept  in  the  office.  The  office  copy  is  used 
to  follow  up   the  shipment  of   (h<!   order.     It  is   necessary   for  the 

329 


IS 


rilK  SIIIPPIX(;  DEPARTMENT 


sliipjtiiig  cU'ik  to  know  iiniiu'diatcly  wIumi  iroods  rcciuircd  (o  fill 
back  orders  aiv  received.  AVheii  a  separate  receiving  ck'rk  is  eni- 
pK>yed,  the  back  onler  is  sometimes  made  in  triplicate,  one  copy  for 
the  receiving  ck'rk,  who  notifies  the  sliipping  clerk  when  the  goods 
arrive. 


OFFICE  COPY 

BACK    ORDER 

OrrtPr  No 

Ship  1-n                                                                                               Pi;^-t-A                                                    IQ 

Via                                            fShipppH                                         rVitp  nrigin;il  f 

■)ndpr 

. 

lit; 


Back-Order  Blank 


AMien  a  back  order  is  filled,  the  shipping  clerk  returns  his  coj)y 
to  the  office.  Invoices  are  made  in  duplicate,  one  copy  being  filed 
as  a  sales  sheet.  The  two  copies  of  the  order  are  filed  with  the 
corresponding  copies  of  the  original  order.  A  most  satisfactory  plan 
is  to  file  one  copy  numerically  and  one  alphabetically,  making  a  cross- 
index.     A  simple  form  of  back-order  blank  is  shown  in  Fig.  7. 

CHECKING  SHIPMENTS 

One  of  the  vitally  important  problems  in  connection  with  shipping 
is  the  proper  checking  of  items  in  each  shipment.  To  receive  com- 
plaints of  shortages  is  very  anno}ing  to  the  shipper — especially  so 


330 


THE  SHIPPING  DEPARTMENT 


19 


when  he  is  not  in  position  to  prove  that  the  items  claimed  to  be 
short  were  shipped — but,  rather  than  take  the  chance  of  losing  a 
customer,  he  usually  pockets  the  loss. 

Shipments  should  be  checked  at  every  stage  in  the  process  of 
filling  the  order,  by  everyone  who  handles  the  goods.  The  stock 
man  should  check  his  part  of  the  order  as  he  assembles  the  goods. 


o 
o 

AMERICAN  MERCANTILE 

•CHICAGO- 

:  CO 

bep 

tnter< 

ShiDD 

"li 

\/i;s                                                                             ,.  .,     r\^«= 

pd 

Dflr.kpri  Nj                              C.hpr.kprt  bu                             Fntprpd  hij 

ORDERED 

SHIPPED 

ARTICLES 

PRICE    1 

AMOUNT 

TOTALS 

■ 

Fig.  8.     Order  Blaak  with  Column  for  Sliipper's  Check 

and  again  before  he  forwards  them  to  the  shipping  room,  or  (he 
next  floor.  \Mien  received  in  (he  shipping  room,  the  goods  should 
be  checked  against  the  shipping  clerk's  order,  and  again  just  before 
they  are  packed. 

It  should  be  a  positive  rule  that  all  goods  shall  be  checked 
when  they  are  placed  in  the  cases.  The  items  should  be  called  off 
by  the  packer  as  he  handles  them,  and  checked  on  the  order  by  a 
checker.  This  is  a  safer  plan  than  calling  off  the  items  from  the 
order,  as  it  insures  a  positive  check  on  the  items  actually  packed — 
not  what  should  have  been  packed.     All  order  blanks  should  be 


331 


20  THE  SHIPPING  DEPARTMENT 

provided  widi  a  separate  column  in  which  to  check  the  items 
actually  shipped,  and  quantities  should  be  entered  in  this  column 
even  if  the  order  is  shipped  in  full.  The  checking  column  on  the 
order  blank  is  shown  in  Fig.  8.  If  the  system  of  entering  orders 
includes  a  copy  to  be  used  as  an  invoice,  the  items  are  entered  in  this 
column  after  the  shipping  order  is  returned  to  the  office. 

The  initials  or  numbers  of  both  packer  and  checker  should 
appear  on  the  shipping  order.  It  is  also  a  good  plan  to  place  in  each 
case  a  packer's  slip,  shown  in  Fig.  9,  giving  the  number  or  initials 

of  the  packer  and  instructing  the 
customer  to  return  the  slip  with 
any  claim  for  shortage  or  dam- 
aged goods.  In  some  houses,  it  is 
the  custom  to  make  the  packer's 
slip  a  duplicate  of  the  order, 
listing  all  items  packed,  in  which 
case,  it  makes  a  convenient  re- 
ceiving slip  for  the  customer. 

^Vhile  not  offering  positive 
insurance  against  mistakes,  a 
thorough  checking  system  will 
reduce  errors  in  packing  to  a 
minimum,  and  will  most  certainly 
pay  for  the  labor  mvolved.  In  large  houses  shipping  a  large  number 
of  packages  over  several  different  railroads,  a  further  complication 
arises  through  the  liability  of  deliveries  being  made  to  the  wTong 
freight  house.  \Miere  several  hundred  shipments  per  day  are  made, 
it  is  not  uncommon  for  a  teamster  to  leave  a  package  at  the  wrong 
road,  finding  himself  short  on  his  deliveries  at  another  road;  or  the 
mistake  may  be  made  in  loading  the  drays. 

One  well-known  mail-order  house  has  overcome  the  difficulty 
in  a  simple  manner.  This  house  is  shipping  several  hundred  pack- 
ages a  day  by  freight,  over  eight  railroads.  The  basis  of  their  shipping 
system  is  a  color  scheme,  each  railroad  being  designated  by  a  different 
color — that  is,  the  New  York  Central  is  represented  by  green,  the 
Erie  by  blue,  etc. 

The  shipping  floor  is  divided  into  sections,  one  for  each  rail- 
road, and  one  for  each  express  company.     The  low  partitions  that 

332 


In  esse  of  C/a/m  for  Shortag- 
es or  Damaged  goods,  or  if  goods 
are  Improperty  packed.   tHls  slip 
must  be  Return&J. 

AMERICAN  MERCAfmLE  CQ 


Fig.  9.     Packer's  Slip 


THE  SHIPPING  DEPARTMENT 


21 


separate  the  sections  are  painted  in  the  colors  representing  the  rail- 
roads, and  over  each  is  a  sign  bearing  the  name  of  the  road,  also 
printed  in  the  corresponding  color.  All  packages  are  taken  directly 
from  the  packing  room  to  the  sections  of  the  shipping  floor  repre- 
senting the  roads  over  which  they  are  to  be  shipped. 

In  all  blanks  used  in  shipping,  the  same  color  scheme  is  carried 
out.  This  includes  shipping  orders,  packing  orders,  invoices,  ship- 
ping receipts,  and  labels.  All  orders  are  properly  routed  before 
they  are  distributed  to  the  billing  machine  operators  for  entry.    Each 


1 

FROM 

AMERICAN   MERCANTILE  CO. 

GHICAeO 

Pnr-                                                                                                         N(% 

VIA                                                                     n^o 

Fr«elgm-  Agents;   /n  case  of  refasBt,  aamage.  oraotroj/.  nattfj/ ua  d^ 
reef  and  disposal  orders  will  bo  given  prompttff. 

Fig.  1 0.     Routing  Package  Labels 


operator  enters  orders  for  certain  railroads — from  one  to  three,  depend- 
ing on  the  distribution  of  the  trade — and  is  supplied  w\\h  blanks  of 
proper  color  for  those  roads  only.  Every  order  is  then  entered  on 
blanks  of  the  color  representing  the  railroad  over  which  the  ship- 
ment is  routed. 

In  Fig.  10  is  shown  a  label  which  represents  this  color  scheme. 
Across  the  end  of  the  label  is  a  solid  block  of  color,  with  the  name 
of  the  road  in  an  open  letter.  All  printing  on  the  label  is  also  of  the 
same  color.  If  the  order  is  properly  routed  and  entered,  there  is 
very  little  chance  for  shipments  to  go  astray.  On  every  blank  and 
on  the  package  itself,  the  color  of  the  road  is  a  prominent  feature, 
and  since  all  blanks  are  written  at  the  same  time,  they  must  corre- 
spond. Should  a  package  be  placed  in  the  wrong  section,  it  is  prac- 
tically certain  that  the  error  will  be  discovered  when  the  goods  are 
loaded  on  the  dray. 

333 


22  TIIK  SHIPPIXCI   DKPARTMRXT 

EXPORT  SHIPPING 

Export  shipping  is  a  subject  about  \vhich  the  average  American 
house  knows  but  little,  and  herein  appears  to  lie  the  cause  of  the  loss 
of  much  foreign  trade.  This  is  especially  true  of  trade  with  other  than 
English-speaking  countries.  But  the  real  fault  lies  farther  back  than 
in  the  shipping  department. 

The  trouble  starts  in  the  sales  department.  Export  business  is 
undertaken  without  special  preparation,  and  an  attempt  is  made  to 
apply  the  methods  used  in  handling  domestic  trade.  Special  instruc- 
tions in  regard  to  packing,  for  instance,  are  ignored  because  the 
American  thinks  he  knows  more  than  his  customer  in  a  foreign  land. 

Before  export  business  is  even  attempted,  the  sales  department 
should  become  thoroughly  familiar  with  conditions  in  the  country 
with  which  it  wishes  to  do  business.  Some  man  in  the  department 
should  study  the  customs  regulations,  the  descriptions  necessary, 
the  kind  of  packing  needed,  and  the  size  of  package  best  adapted  to 
the  country.  Above  all,  he  must  study  the  desires  of  the  trade,  and 
conform  to  them,  if  he  expects  to  make  and  hold  customers. 

Special  importance  is  attached  to  the  question  of  packing  and 
describing  the  goods.  No  matter  how  unreasonable  the  request  of 
the  customer  or  the  foreign  salesman  may  seem,  it  should  be  complied 
with,  for  it  is  made  for  some  good  reason.  A  request  of  a  merchant 
in  Omaha,  ordering  dry  goods  from  Chicago,  that  goods  ordinarily 
packed  in  a  large  case  be  packed  in  small  oblong  boxes,  might  very 
properly  be  ignored;  but  not  so  if  the  customer  is  located  in  a  South 
American  republic.  Tliere,  if  the  goods  are  to  go  to  the  interior, 
they  must  be  transported  over  the  mountains  on  the  backs  of  pack 
mules. 

Besides  making  the  packages  of  suitable  size,  goods  for  export 
must  be  packed  to  withstand  hard  usage,  and  must  be  well  protected 
against  the  elements.  Goods  must  be  fully  and  accurately  described 
in  order  that  they  may  pass  the  custom  house.  The  dimensions 
of  each  package  must  be  shown  on  the  shipping  bills,  for  freight 
rates  are  based  on  the  space  occupied  in  the  hold  of  the  ship,  rather 
than  on  weight. 

In  a  recent  address  on  trade  conditions  in  the  Latin-American 
countries,  W'm.  Harley  Porter,  Deputy  Captain  of  the  Port  of  Cien- 
fuegos,  during  the  occupation  of  Cuba  by  the  United  States  ffovem- 

334 


THE  SHIPPING  DEPARTMENT  23 

ment,  made  some  very  pertinent  suggestions  on  these  questions,  some 
of  which  are  published  by  permission — as  follows: 

To  secure  South  American  trade,  we  must  first  train  salesmen. 
They  must  make  an  exhaustive  study  of  the  different  South  American 
tariffs  and  at  least  know  Spanish.  They  must  be  willing  to  accept  in- 
structions as  to  shipping,  and  be  powerful  enough  to  insist  that  they  be 
carried  out  literally.  And  it  would  be  a  good  thing  for  them  to  take  a 
kindergarten  course  in  carpentry  and  blacksmithing,  so  that  they  would 
not  continue  the  stupid,  expensive  blunders  of  American  houses  in  the 
packing  of  goods. 

I  don't  know  how  to  drive  that  last  statement  home  hard  enough. 
Our  consuls  plead  with  our  exporters,  and  our  Government  distributes 
volumes  freely  on  the  subject,  yet  there  is  no  apparent  improvement. 

I  confess  that  until  I  had  some  first-hand  experience,  I  supposed 
that  the  packing  evil  was  a  convenient  sort  of  filler,  with  which  Consuls 
padded  their  reports  for  want  of  better  material. 

In  order  to  fit  out  the  custom  house  of  Cienfuegos,  Cuba,  with  new 
office  furniture,  we  placed  an  order  amounting  to  nearly  one  thousand 
dollars  with  a  Chicago  house  that  brazenly  advertised  that  it  made  a 
specialty  of  export  business.  Their  booklet  was  encouraging,  and  the 
prices  really  low.  So  we  ordered  roll-top  and  flat-top  desks,  cashier's 
desks,  office  chairs,  tables  and  card  cabinets,  and  then  worried,  for  fear, 
that  the  goods  would  not  arrive  before  the  end  of  the  fiscal  year,  then 
rapidly  approaching,  in  which  event,  our  furniture  appropriation  would 
revert  to  the  island  treasury. 

Six  weeks  from  the  day  the  order  reached  Chicago,  the  goods  left 
New  York — time  enough  to  have  had  them  come  from  Hawaii.  With 
the  goods  came  a  single  invoice.  The  vouchers  in  triplicate,  which  must 
be  filled  properly  before  the  account  can  be  paid  by  a  governmental 
department,  had  been  thrown  aside  as  of  no  use.  To  protect  the 
exporter,  a  voucher  was  drawn,  for  the  ship  reached  port  on  June  30,  the 
last  day  of  the  fiscal  year.  Several  dollars  were  wasted  in  cable  messages 
to  expedite  the  return  of  new  invoices,  and  the  goods  were  unpacked. 

Not  one  piece  of  furniture,  save  a  few  chairs,  was  found  whole. 
No  American,  in  the  States,  would  have  accepted  the  goods.  We  had 
paid  for  them.  A  letter  of  remonstrance  brought  back  a  churlish  answer, 
written  in  a  cocky  American  spirit  of  superiority,  to  the  effect  that  possi- 
bly some  one  outside  could  tell  that  house  something  about  packing  their 
own  goods,  but  they  would  be  greatly  surprised  to  meet  such  a  person. 

The  trouble  lay  in  the  thinness  of  the  packing  cases.  Goods  are 
loaded  into  a  ship  by  casting  a  rope  sling  about  their  middle,  by  which 
they  are  hoisted  up  and  let  down,  often  with  a  run,  into  the  hold.  Our 
desks,  without  sufficient  outer  protection  and  not  being  built  on  the  prin- 
ciple of  a  truss  bridge,  naturally  collapsed.  The  cases  were  none  too  good 
for  a  railway  journey,  and  were  certain  to  be  damaged  at  any  Central 
or  South  American  port  because,  in  nearly  every  case,  unloading  is  done 
from  the  ship  to  a  lighter,  and  from  the  lighter,  by  main  strength  and 
awkwardness,  to  a  wharf. 

335 


24  THE  SHIPPING  DEPARTMENT 

I  cannot  recall  one  instance  in  which  American  houses  carried  out 
instructions  literally.  I  believe  that  there  is  a  great  future  for  an  American 
exporter  who  will  let  the  man  on  the  ground  do  his  own  thinking,  and  take 
it  for  granted  that  he  knows  what  he  wants  and  how  he  wants  it.  The 
exasperation  of  a  man  who  is  weeks  or  months  away  from  the  markets, 
and  who  finds  that  substitution  has  been  practiced,  or  his  goods  so  packed 
that  destruction  was  plainly  inv-ited,  cannot  be  adequately  described  by 
a  man  on  my  income. 

We  bought  a  typewriter  in  New  York,  one  time,  for  two  reasons: 
We  could  get  the  liberal  discount  allowed  the  government  if  we  bought 
direct  from  the  maker,  and  we  could  evade  a  25%  duty  if  we  received  it 
through  our  custom  house  and  not  through  another.  Also  there  was  a 
line  of  steamers  from  New  York  to  our  wharf. 

Some  five  weeks  after  placing  the  order,  we  were  notified  by  an 
express  company  in  Havana  that  it  had  accepted  for  our  account  a  type- 
writer, and  that  when  the  duty,  plus  accrued  express  and  forwarding 
charges,  amounting  to  $45.03,  were  paid,  it  would  be  dispatched  in  our 
direction. 

We  were  out  $40.03  because  some  fool  shipping  clerk  had  insisted 
on  trying  to  do  our  heavy  thinking.  We  had  given  him  the  name  of  the 
steamer  by  which  the  machine  was  to  be  shipped,  but  he  had  discovered,  in 
Bome  way,  that  steamships  will  not  make  a  bill  for  less  than  a  metric  ton. 
That,  he  doubtless  learned,  would  cost  us  $5.00.  The  package  only  weighed 
about  30  lbs.,  so  he  started  it  off  by  express.  His  brain  did  not  carry  far 
enough  for  him  to  learn  that  only  one  American  express  company  crossed 
the  Florida  Strait  and  naturally  chance  took  it  to  another  company. 
Two  changes  were  made  in  express  companies  before  the  box  reached  the 
coast  and  the  package  sauntered  about  in  our  beautiful  Southland  for 
more  than  a  month  before  it  landed  in  Havana. 

Had  any  Spanish  merchant  been  subjected  to  the  invariable  annoy- 
ance which  fell  to  our  lot  when: we  endeavored  to  patronize  American 
houses,  he  would  have  given  up  in  despair  and  remembered  the  adage  of 
the  burnt  child,  forever. 

And,  unfortunately,  the  carelessness  of  American  shippers  often 
costs  the  foreign  merchants  good,  hard  dollars.  Tariffs  in  Latin- Ameri- 
can republics  are  fearfully  and  wonderfully  made,  and  there  is  nothing 
that  a  pin-headed  government  employe  enjoys  more  than  inflicting  a  fine 
for  a  slip  in  compljdng  with  a  little  red  tape. 

Here  is  a  case  in  point.  A  large  house  in  Mexico  City  bought  a 
carload  of  chairs  over  here,  and  with  the  order  sent  the  shipping  forma 
prescribed  by  the  Mexican  government.  A  very  explicit  letter  was  sent 
also,  saying  that  consular  invoices  would  be  provided  by  their  custom 
house  broker  in  Laredo,  who  would  receive  the  goods  at  the  border,  but 
that  the  shipping  forms  must  be  fiUed  out,  each  package  numbered  with 
a  serial  number  on  the  forms.  FuU  description  involved,  of  course,  a 
statement  as  to  the  kind  of  wood  used,  so  that  the  duty  might  be  easily 
adjusted. 

The  goods,  however,  were  simply  Consigned  as  so  many  bundles 
of  chairs,  weight  so  much.    The  shipping  lists  were  ignored.    The  in- 


336 


THE  SHIPPING  DEPARTMENT  25 

nocent  receiver  of  those  goods  was  fined  both  because  they  had  not  been 
properly  described  and  because  the  weight  was  grossly  understated. 
It  cost  the  Mexican  house  $800  and  when  the  American  was  asked  to  settle 
the  charges  caused  by  carelessness,  or  pig-headedness,  he  merely  answered 
that  he  was  not  going  to  settle  any  bills  with  the  Mexican  government. 

The  Mexican  firm  settled — it  had  to — and  posted  every  importer 
in  the  republic  in  the  matter,  so  that  not  only  will  that  American  house 
not  sell  any  more  chairs  in  Mexico,  but  Americans  generally  have  been 
given  another  black  eye. 

There  is  a  good  reason  for  careful  custom  regulations,  and  the 
exporter  should  know  that  they  are  partly  for  his  protection.  For  in- 
stance, they  usually  require  that  a  certain  number,  generally  ten  per 
cent,  of  all  packages  shall  be  opened  and  compared  with  the  shipping  list. 
If  these  packages,  chosen  at  random,  are  correct,  the  consignment  is  de- 
livered. But  if  any  variation  is  found,  fraud  is  assumed,  and  every  pack- 
age is  thoroughly  examined,  usually  with  more  or  less  damage. 

It  is  customary  for  English  and  German  firms,  in  the  packing  of 
small  articles,  to  use  different  colored  pasteboard  boxes,  which  are  often 
decorated  with  pictures  indicating  the  contents.  For  instance,  in  a  large 
packing  case  containing  a  stock  of  gentlemen's  furnishings,  all  collars  will 
be  in  boxes  of  one  color,  socks  in  another,  cravats  in  another,  etc.  The 
large  case  is  lined  with  tin,  by  the  way,  and  after  packing,  the  tin  joints 
are  soldered  around  the  top.  Here  is  the  English  system:  First,  the 
email  boxes,  individualized  as  much  as  possible;  then  heavy  wrapping 
paper,  then  a  tin  lining  inside  of  an  outer  wooden  casing,  the  latter  being 
well  made  and  reinforced  with  iron  straps.  Last  of  all,  directions  and 
addresses  are  stenciled  in  large,  clear  block  letters.  The  Germans  often 
use  oiled  paper  between  the  tin  and  the  inner  packages,  so  that  even  if  the 
tin  is  punctured,  the  oiled  paper  will  resist  the  sea  air,  which  invariably 
injures  delicate  fabrics. 

The  American  idea  seems  to  be  to  put  as  much  as  possible  in  a  large, 
thin  box  or  a  poorly  bound  bale.  The  European,  whose  agents  study 
conditions  on  the  ground,  knows  that  much  interior  transportation  in 
Latin  America  is  packed  by  pack  mule,  and  therefore  uses  medium-sized 
oblong  boxes,  two  of  which  make  a  good  load. 

I  cannot  emphasize  too  strongly  the  necessity  for  careful  descrip- 
tion of  goods  to  pass  them  through  a  custom  house  with  the  least  incon- 
venience. Mixed  consignments  must  pay  the  highest  duty  assessed 
against  anything  found  in  a  lump  or  poorly  described  quantity.  If  you 
deal  in  bolts,  for  instance,  you  may  not  merely  say  1^000^  ^X~Xt  holts, 
but  you  should  say  whether  they  arc  cotton,  linen,  or  woolen.  They  have 
to  know,  before  they  can  assess  duty. 

Instead  of  a  ringing  peroration  about  American  pluck,  progressive- 
ness,  and  other  non-essentials,  let  me  give  you  some  shipping  rules,  if 
you  are  going  to  have  a  try  for  South  American  trade. 

Secure  shipping  list  forms  beforehand  and  find  out  if  consular 
invoices  are  needed. 

Pack  your  goods  in  small  packages,  for  you  will  pay  freight  on  metric 
tons  and  they  arc  based  on  cubic  measure  and  not  on  weight. 


337 


26  THE  SHIPPING  DEPARTMENT 

Pack  well,  for  tons  of  stuff  will  probably  lie  on  your  cases. 

Give  each  package  a  serial  number  and  describe  it  by  that  num- 
ber, on  the  shipping  forms. 

If  your  goods  can  be  damaged  by  sea  water,  use  tin-lined  cases. 

Your  invoices  should  show  not  only  number,  measurement,  and 
exact  contents  of  each  package,  but  their  gross,  tare,  and  net  weight, 
for  in  many  cases  the  container  must  pay  the  same  duty  as  the  contents. 

Be  sure  that  your  forwarding  agent  is  reliable,  for  the  law  allows 
him  many  charging  privileges  if  you  are  careless  in  providing  for  con- 
tingencies. 

Contract,  if  you  can,  for  through  transportation  and  get  from  the 
transportation  companies  the  requisite  export  manifests  to  accompany 
shipment. 

Make  triplicate  invoices,  one  to  accompany  the  goods  and  two  to 
be  mailed  to  the  consignee.  One  of  these  will  be  turned  over  to  the 
custom  officials,  so  in  case  the  invoice  sent  with  the  goods  fails  to  come 
through,  and  that  often  happens,  the  triplicate  can  be  accepted.  With- 
out an  invoice  your  goods  cannot  leave  the  ship,  and  I  know  of  cases  where 
cargoes  have  been  held  awaiting  invoices  for  eight  weeks. 

And,  in  conclusion,  remember  that  sentiment  is  not  the  foundation 
for  foreign  trade.  If  we  sell  abroad  we  must  do  so  on  merit  and  by 
foreign  systems — not  our  own. 

FREIGHT  CLAIMS 

Freight  claims  are  an  ever  present  source  of  annoyance.  Every 
shipper,  and  practically  every  receiver,  of  freight  finds  it  necessary 
to  make  claims  against  the  railroads  for  freight  overcharges,  short- 
ages, and  damages  to  goods  in  transit.  Some  houses  find  occasion 
to  make  but  one  or  two  claims  a  year;  others  constantly  have  several 
claims  on  file,  aggregating  a  large  number  each  year,  but  no  matter 
what  the  number,  they  must  be  given  proper  attention. 

Handling  freight  claims  is  not  one  of  the  usual  duties  of  the 
shipping  clerk,  nevertheless,  it  is  a  proper  topic  for  discussion  in  con- 
nection with  the  subject  of  shipping.  The  traffic  manager,  when  one 
is  employed,  handles  the  freight  claims;  otherwise  the  details  are 
handled  by  some  other  minor  oflBcial — as  the  cashier  or  the  purchas- 
ing agent. 

The  adjustment  of  claims  involves,  usually,  a  large  volume  of 
correspondence,  and  requires  a  man  of  tact.  He  must  possess  patience 
and  persistence  to  a  marked  degree.  Diplomacy  of  a  high  order  is 
necessary  in  his  correspondence,  and  promptness  is  an  important 
factor.  Threats  have  little  effect,  other  than  to  delay  adjustment 
of  the  claim. 


838 


THE  SHIPPING  DEPARTMENT  27 

Before  a  claim  is  presented,  all  information  pertaining  to  the 
case  in  possession  of  the  claimant  must  be  assembled,  and  all  facts 
should  be  incorporated  in  the  papers  filed.  A  bill  should  be  made 
against  the  railroad  for  the  amount  of  the  claim,  and  to  this  should 
be  attached  the  freight  receipt  or  other  voucher.  These  papers  should 
be  accompanied  by  a  letter  giving  a  plain  statement  of  the  basis  of 
the  claim;  if  for  an  overcharge,  the  number  of  the  tariff  and  the 
classification  on  which  it  is  based  should  be  cited.  The  claim  papers 
should  be  as  complete  as  it  is  possible  to  make  them,  presenting  all 
facts  having  a  possible  bearing,  otherwise  they  will  be  returned  by 
the  claim  agent  of  the  railroad  for  further  information.  Some  of 
the  questions  asked  by  the  claim  agent  may  seem  trivial  to  the  claim- 
ant, but  the  answers  are  necessary  to  him  in  completing  the  files  of 
his  oflBce.  When  claim  papers  are  returned  through  the  local  freight 
office,  the  information  asked  should  be  given  and  the  papers  returned 
at  once. 

Claimants  become  very  impatient  over  delays  in  the  adjustment 
of  their  claims,  forgetting  that  where  they  handle  perhaps  a  dozen 
claims  a  year,  the  railroad  claim  agent  must  handle  thousands,  in- 
volving amounts  ranging  from  a  few  cents  to  many  hundreds  of 
dollars.  They  also  overlook  the  fact  that  a  shipment  has  passed 
over  several  roads,  and  that  before  the  claim  can  be  adjusted,  it  must 
be  ascertained  on  what  road  the  damage  was  sustained.  The  different 
roads  involved  must  adjust  the  claim  between  themselves,  before 
they  can  tell  where  the  money  with  which  to  pay  it  is  coming  from. 
The  papers  must  pass  through  the  hands  of  agents  at  all  junction 
and  transfer  points,  and  the  claim  departments  of  all  roads  involved, 
before  the  claimant  can  expect  a  reply. 

On  the  other  hand,  it  is  not  good  business  to  rely  solely  on  the 
railroad.  Claim  papers  sometimes  repose  indefinitely  in  the  desk 
of  some  local  freight  agent,  until  brought  to  light  by  a  persistent 
follow-up;  occasionally  the  papers  are  lost.  A  follow-up  of  freight 
claims  is,  therefore,  a  necessity.  The  shipper  who  is  most  persistent 
in  following  up  his  claims,  is  usually  the  beneficiary  of  the  most 
prompt  service. 

Railroads  number  all  claims  as  received,  and  invariably  refer 
to  them  by  number.  It  is  an  excellent  plan,  therefore,  for  the  shipper 
to  adopt  a  numerical  system  for  the  purpose  of  identification.     It  is 

339 


28  TliJ^  SlllPriNc;  DEPARTMENT 

quite  important  that  all  correspondence  relating  to  a  claim  be  kept 
together,  and  this  is  best  done  by  using  a  folder  for  each  claim.  The 
number  of  claims  is  so  small  that  it  is  not  necessary  to  use  an  entire 
drawer  for  claims;  tliey  can  be  accommodated  in  the  front  of  a  drawer 
used  for  regular  correspondence. 

The  outside  of  the  folder  should  provide  for  the  name  and 
address  of  the  consignor  or  consignee,  as  the  case  may  be,  name  of 


T 


Consignor  or 


5hipp"\ng  PolrvT P  \?.  Mo. . 

RaVlroad  ____________________________________ 


Fig.  11.     Folder  for  Freight  Claims 

the  railroad  on  which  claim  is  made,  the  shipper's  claim  number, 
and  the  railroad's  claim  number,  as  shown  in  Fig.  11.  In  this  folder, 
copies  of  the  bill  and  of  all  letters  to  the  railroad  company  should  be 
filed.  The  folders  are  filed  numerically,  in  the  order  of  the  shipper's 
claim  numbers. 

To  follow  up  the  claim,  and  to  provide  an  Index  to  the  file  of 
claim  folders,  a  card,  similar  in  form  to  the  one  shown  in  Fig.  12, 
should  be  used.  This  card  provides  for  a  complete  history  of  the 
claim.    At  the  head  of  the  card  is  shown  the  name  of  the  consignor 

340 


THE  SHIPPING  DEPARTMENT 


29 


or  the  consignee,  shipping  point,  shipper's  and  railroad's  claim 
numbers,  dates  of  shipment,  receipt,  and  filing  of  claim,  the  railroad 
on  which  claim  is  made,  and  the  name  of  the  claim  agent.  This  is 
followed  by  a  brief  statement  of  the  nature  and  amount  of  the  claim. 
The  two  bottom  lines  provide  for  a  record  of  the  payment  or  rejec- 
tion of  the  claim.  All  of  the  information  most  likely  to  be  needed  is 
found  by  turning  to  this  card,  without  the  necessity  of  consulting  the 
correspondence  in  the  claim  files. 


;    e   3   -*    5   6    7    8    9  10  a   tZ  is  I4  tS  I6  r?  ta  I9  20  21  22  23  Z4  2S  as  27  28  29  S)  ^ 

Consignor  01* 

Consignee                                                                                          Claim  Na 

Shipping  Point                                                                                       R.R.Ck3im,No, 

Date  Shipment                               Date  Received                              Oat©  FHed 

Rallroacr                                       Claim  Agent 

NATURE    OF    CLAIM 

AMOUNT       I 

Date  Acknowledged                                     Date  Allowed                                 Amt  fotd$ 

Oert-e  Rejected 

OVER 

Fig.  12.     Card  for  Follow-Up  of  Claims 

The  manner  of  filing  the  card  depends  somewhat  on  circum- 
stances. The  usual  plan  is  to  file  alphabetically,  under  the  name  of 
the  consignor,  first  grouping  by  railroads.  If  goods  are  received 
and  shipped  over  but  one  road,  all  of  the  cards  would  be  filed  in  one 
index.  But  if  more  than  one  road  is  used,  an  index  card  would  be 
used  for  each  road,  and  the  cards  arranged  alphabetically  back  of 
the  index  cards  of  the  roads  involved.  This  arrangement  brings  the 
cards  of  all  claims  against  one  road  together,  which  is  a  logical  plan, 
since  it  is  the  railroad  with  whom  the  claimant  is  dealing. 

Across  the  top  of  the  card  is  a  series  of  numbers,  from  1  to  31. 
These  represent  the  days  of  the  month,  and  are  used  in  connection 
with  the  follow-up  of  the  claim.     Metal  tabs  are  placed  over  the  dates 


341 


30 


THE  SHIPPING  DEPARTMENT 


on  which  it  is  desired  to  have  the  claim  brought  to  notice — that  is, 
if  the  claim  is  to  be  followed  up  on  the  20th,  a  tab  is  placed  over  the 
number  20.  On  that  day  all  cards  with  tabs  over  this  number  are 
removed  from  the  file,  and,  after  the  claims  have  received  proper 
attention,  the  tabs  are  moved  forward  to  the  next  follow-up  date, 
and  the  cards  returned  to  the  file. 

A  record  of  all  correspondence  in  connection  wuth  the  claim  is 
made  on  the  back  of  the  card,  which  is  ruled  and  printed  for  the 


LETTERS 

DATE 

TO 

DATE 

FROM 

Fig.  13.     Record  of  Correspondence  on  Back  of  Follow- Up  Card 

purpose,  as  shown  in  Fig.  13.  This  constitutes  a  tracer  which  shows, 
without  reference  to  the  files,  just  what  correspondence  has  been 
required  in  the  adjustment  of  the  claim. 

When  the  number  of  claims  on  file  is  large,  there  should  be 
another  record  which  will  show  the  amount  of  claims  outstanding 
against  each  railroad.  Of  course,  the  card  file  gives  this  information, 
but  some  of  the  cards  are  very  likely  to  be  out  of  the  file,  so  that  the 
amount  obtained  by  a  recap  of  the  cards  at  any  time  may  not  repre- 
sent the  correct  total. 

An  account  with  each  railroad  can  be  kept  on  a  card,  as  shown 
in  Fig.  14.  This  card  should  be  filed  with  the  claim  cards,  imme- 
diately behind  the  guide  card  of  the  road.  In  effect,  it  is  a  ledger 
account,  representing  a  contingent  asset. 


342 


THE  SHIPPING  DEPARTIMENT 


31 


From  an  accounting  standpoint,  the  proper  method  is  to  charge 
all  claims  to  a  claim  account,  crediting  whatever  account  may  be 
affected,  at  the  same  time  charging  the  railroad  on  the  card  referred 
to  above.  If  an  overcharge  has  been  paid  on  a  shipment  received, 
the  entry  would  be: 

Claim  Account  $_ . 

In  Freiffht  $ 


Railroad                                                   Claim  Agent 

DATE  FILED 

CLAJM  NO. 

NATURE ' 

AMOUNT   1 

DATE  PAID 

AMOUNT 

1 

Fig.  14.    Claim  Account  Card 

When  a  claim  is  disposed  of — paid  or  rejected — claim  account 
receives  credit,  while  the  debit  is  to  cash,  or  the  account  originally 
affected.  Using  the  above  illustration,  if  the  claim  is  paid  in  full 
the  entry  is; 

Cash  $ 

Claim  Account  $ 

If  the  claim  is  rejected : 

In  Freight  $ 

Claim  Account  $ 


343 


AMERICAN  SCHOOL  OF    CORRESPONDENCE.    CHICAGO.                           ^^^^ 

REGISTER    OF    BOOK   SALES  •                               Date                                       in 

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'■ 

uJ 
O 

a 
a. 

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o 
a. 

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o 

(0 

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z 
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o 

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CD 

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Z 
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UJ 

a 

UJ 

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o 
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3 

) 

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) 

_ 

844 


THE  SHIPPING  DEPARTMENT  33 

Thus  the  claim  account  is  a  controlling  account,  the  balance  repre- 
senting the  total  claims  outstanding,  and  agreeing  with  the  totals 
of  the  claims  against  the  different  roads  as  shown  by  the  cards. 
Claim  account  represents  a  questionable  asset,  and  should  be  so 
treated  in  the  balance  sheet,  a  liberal  discount  being  made  in  the 
value  represented  by  the  account. 

EXPRESS  SHIPMENTS 

Many  business  houses  are  selling  classes  of  goods  which  are 
most  successfully  shipped  by  express.  This  is  especially  true  of  those 
houses  that  transact  the  larger  part  of  their  business  by  mail.  The 
question  of  shipping  by  express  is,  in  itself,  quite  simple,  but  there 
are  numerous  details  connected  with  the  handling  of  such  orders 
which  require  close  attention.  While  these  details  vary  in  different 
businesses,  as  a  typical  illustration  the  business  of  selling  books  by 
mail  has  been  selected. 

When  an  order  is  received,  the  first  step  is  to  check  the  source — 
whether  from  circularizing,  a  re-order,  or  periodical  advertising, 
and  if  the  latter,  the  name  of  the  publication.  This  information 
should  be  entered  on  the  original  order. 

Cash  and  charge  orders  should  then  be  separated,  and  on  the 
charge  orders  the  next  step  is  to  investigate  the  credit  and  check  the 
address,  especially  when  no  advance  payment  is  made.  The  address 
is  checked  against  any  list  that  may  have  been  used,  or  against  city 
directories,  when  such  are  available.  If  the  list  used  has  proved 
reliable,  it  usually  is  safe  to  pass  the  order  from  one  whose  name 
appears  therein.  Or  the  occupation  given  in  the  directory  may 
warrant  the  acceptance  of  the  risk.  If  he  is  a  customer,  his  manner 
of  paying  in  the  past  is  the  l>est  guide. 

Should  all  of  these  sources  of  information  fail,  and  if  the  cus- 
tomer gives  no  references,  it  is  well  to  secure  a  report  from  some 
commercial  or  collection  agency.  It  may  be  necessary  to  follow  up 
the  agency,  but  if  a  reliable  agency,  like  Martindale,  is  unable  to 
obtain  information,  it  is  best  to  refuse  the  order  except  on  a  cash 
basis. 

The  order  having  been  accepted,  it  should  be  entered  in  an 
order  register,  giving  the  name  of  the  purchaser,  the  address  in 
detail,  description  of  the  article  ordered,  source  of  the  order,  and 

345 


.'^4 


THE  smrrixc;  dkpautmkxt 


tlio  price*  A  sheet,  :is  shown  in  Fig.  15,  should  he  used  ft)r  each 
day's  sales.  The  sheets  should  be  in  duplicate,  as  a  copy  is  needed 
by  the  statistical  department,  from  which  to  tabulate  the  sales  from 
different  sources. 

The  next  step  is  to  open  an  account  on  a  ledger  card,  as  shown 
in  Fiir.  IG.    At  the  same  time  a  collection  card  should  be  made. 


Name 

.LEDGER 

No. 

Residence 

Mo  Paym't 

Due  Date 

BOOKS 

Business  Address 

. 

Reference 

Source 

Date  Enrolled 

Price 

Date  Books  sent  Via. 

DATE 

DR. 

CR. 

BAL. 

DATE 

DR. 

ca 

BAL. 

DATE 

DR. 

CR. 

BAL.  1 



1 

Fig.  16.     Ledger  Card 

Both  of  these  cards  should  be  filled  in  from  the  original  order — not 
from  the  register.  If  the  number  is  large,  the  accounts  should  be 
numbered,  the  number  being  entered  on  both  the  ledger  and  collec- 
tion cards.  From  the  ledger  cards,  the  numbers  are  entered  on  the 
register.  Two  indexes  are  made — one  alphabetical  and  one  geo- 
graphical— on  plain  index  cards,  only  the  name  and  address,  name 
of  publication  ordered,  and  the  account  number  being  shown.  One 
of  these  cards  is  filed  alphabetically  and  the  other  geographically, 
while  the  ledger  cards  are  filed  numerically. 


346 


THE  SHIPPING  DEPARTIMENT  35 

Each  day,  before  the  cards  are  filed,  the  amount  of  the  new 
accounts  should  be  obtained  on  an  adding  machine,  and  checked 
against  the  total  of  the  order  register  sheet.  This  will  guard  against 
errors  in  transcribing,  for  it  is  improbable  that  the  same  error  will 
be  made  in  entering  the  order  on  the  register  and  on  the  card. 


PROM     AMERICAN    SCHOOL    OF   CORRESPONDENCE 
I  CHfCAGO,    ILL.,  U.S.A. 


For. 


.Express  Prepaid. 


PRINTED    MATTER 


Ship  tQ  above  address: 


Signed. 


Courrterslgned  or  CftecKBd . 
Entered  |n  Shipping 'Book  by. 


Date .^\9. 


Fig.  17.     Shipping  Order  and  Label  Made  at  Cue  Writing 

Tlie  statistical  department  will  ()])tain  a  record  of  total  sales 
from  the  duplicate  register  sheet,  and,  for  this  reason,  the  amount 
should  be  checked  against  the  original  sheet.  Since  these  sheets  are 
footed  by  different  people,  this  comparison  affords  a  reasonable  proof 
of  accuracy,  and  also  insures  the  use  of  the  same  totals  by  the  statistical 
and  order  departments. 


347 


30 


THE  SHIPPING  DEPARTMENT 


The  order  is  now  properly  recorded  and  is  ready  for  shipping. 
But  before  a  shipping  order  can  l>e  made,  it  must  be  routed.  This 
is  done  by  consulting  a  postal  and  express  shipping  guide,  in  which 
will  be  found  the  name  of  every  postoffice  in  the  country,  the  names 
of  the  express  companies  reaching  that  point,  or,  if  not  an  express 
office,  the  name  of  the  nearest  office.  The  name  of  the  express  com- 
pany is  entered  on  the  order,  which  is  then  turned  over  to  the  billing 
clerk. 


7?>6  Company's  Charge  Is  basea  upon  ttiQ  ii/ue  of  tlm  Property,  w/iicft  mustfio  atClattCOg  ftit  itlippv. 

fiK'ffiiS      ADAMS. _ EXPRESS    COMPANV. 

7»«  Property  hereinafter  described  to  be  forwarded  iubj&cf  to  the  t^rmz  and  conaitiafa  ctTJm 

Company's  regular  farm  of  rece/pf  printed  oo  inside  Iront  cover  of  tills  book. 
Uabilify  llm/ted  iz>  $S0  unless  a  greater  value  is  declared. 

ARTICLE 

VALUE 

CONSIGNEe 

DESTINATION 

PREPAID 

RECEIVER'S 
SIGNATURE 

NO  OF  RECE5 
RECEIVED 

1 

Fig.  18,     Prepaid  Shipping  Sheet 

The  making  of  a  shipping  order.  Fig.  17,  is  the  next  step.  At 
the  head  of,  and  attached  to,  the  order  is  a  label  as  shown  in  the 
illustration.  This  shows  the  name  and  address,  and  the  name  of 
the  express  company,  which  information  is  duplicated  on  the  order 
blank  by  means  of  carbon  paper.  Tlie  body  of  the  order  gives  full 
particulars  of  the  articles  to  be  shipped,  names  of  the  order  clerk, 
checker,  and  entry  clerk,  together  with  the  date.  All  orders  should 
next  be  entered  on  the  shipping  sheets,  which  are  supplied  by  the 


348 


THE  SHIPPING  DEPARTMENT  37 

express  companies.  A  prepaid  sheet  \s  shown  in  Fig.  18.  This 
is  made  in  duplicate,  one  copy,  signed  by  a  representative  of  the 
express  company,  remaining  with  the  shipper.  The  copy  for  the 
express  company  serves  as  a  voucher  for  the  collection  of  the  charges. 

The  express  shipping  sheet  and  the  orders,  with  labels  attached, 
should  be  sent  to  the  packing  and  shipping  room,  where  the  goods 
are  packed  and  shipped.  The  order  should  then  be  returned  to  the 
oflBce,  and  filed  with  the  customer's  orders  in  the  correspondence 
files.  This  should  be  a  formal  acknowledgment,  giving  full  infor- 
mation as  to  when  and  how  shipped. 

It  will  be  seen  from  the  above  that  orders  of  this  class  necessitate 
a  number  of  details,  each  of  which  forms  an  important  link  in  the 
complete  chain 

RETAIL  DELIVERY  SYSTEM 

Not  the  least  important  problem  in  shipping  is  that  of  the  retail 
store.  While  this  problem  is  of  special  importance  in  a  large  city, 
it  is  one  which  must  be  met  by  the  retailer  in  every  community. 
Under  present  conditions,  the  retailer  is  obliged  to  deliver  a  large 
per  cent  of  the  goods  that  he  sells,  and  the  tendency  is  for  this  per- 
centage to  increase  rather  than  decrease. 

The  shipping  or  delivery  department  is  the  busiest  in  the  entire 
establishment;  the  details  are  so  many  that  only  with  the  most  per- 
fect system  can  the  work  be  handled.  The  delivery  system  of  one 
of  the  big  stores  is  a  revelation  to  most  men ;  and  when  our  purchase, 
which  is  but  one  of  thousands  made  in  an  hour,  is  delivered  at  our 
door,  five  or  ten  miles  away,  two  to  five  hours  later,  we  marvel  at  the 
perfect  working  of  an  apparently  complex  machine.  And  yet,  when 
we  study  it,  we  discover  that  the  controlling  factor  of  this  vast  system 
is  its  simplicity.  Less  confusion  is  found,  and  fewer  mistakes  are 
made,  in  the  delivery  department  of  the  largest  stores  in  the  world 
than  by  the  delivery  boy  of  your  corner  grocer;  and  simple  system — 
method — at  every  step  from  the  sale  to  the  final  delivery  is  responsible. 

While  not  realjy  complicated,  the  system  of  a  big  store  is  built 
to  care  for  many  more  details  than  are  met  with  in  the  smaller  store. 
Since  a  vast  majority  of  retail  establishments  are  in  the  latter  class, 
this  discussion  is  confined  to  the  needs  of  a  store  of  average  size. 

Average  size  is  a  relative  term.     A  store  of  average  size  in  one 

349 


38  THE  SHIPPING  DEPARTMENT 

community  would  be  considered  as  a  big  store  in  another.  In  a 
large  city,  leading  stores  dealing  in  exclusive  lines — such  as  clothing, 
shoes,  or  cloaks  and  suits — answer  the  description,  and  it  is  the  needs 
of  such  a  store  that  are  discussed  herein.  A  system  adapted  to  the 
needs  of  a  store  of  this  class,  can  easily  be  expanded  for  a  department 
store  or  modified  for  a  smaller  establishment. 

Delivery  Tag.     A  delivery  system  starts,  not  in  the  shipping 
room,  but  when  the  sale  is  made.     The  very  first  requisite  is  a  correct 


■UNPACK    AT    ONCE    TO    AVOID    CREASING- 

_FROM    MAURICE   L.  ROTHSCHILDS 

-Good  Clothes  and  Nothing  Else - 

S.W.  CORNER    JACKSON  AND    STATE.  CHICA50. 

N^rnP  , 

Date 

Address  — 
Near  what 
Salesman_ 
RemanKs:- 
COD.   $.. 

s-t-pp.P-t-                                                                           P\^r 

lnspp.c.1-nr           . 

WEST 

■ 

Fig.    19.     Label  with  Colored  Border  to  Indicate  Eoutiug 

address,  and  the  securing  of  the  address  rests  with  the  sales  person. 
Unless  every  necessary  precaution  to  insure  accuracy  at  this  point  is 
taken,  the  further  provisions  of  the  system  are  without  avail. 

The  first  step,  then,  is  for  the  sales  person  to  write  the  label  or 
tag  that  is  to  be  attached  to  the  package.  It  should  not  be  left  for 
another  to  write  the  final  delivery  ticket;  this  should  invariably  be 
done  by  the  sales  person,  who  then  becomes  responsible  for  the 
address.  In  some  small  stores,  the  duplicate  sales  ticket  is  made  to 
do  service  as  a  delivery  ticket,  but  it  is  much  the  safer  plan  to  use  a 
separate  tag  or  label  for  this  purpose.     The  address  on  the  duplicate 

350 


THE  SHIPPING  DEPARTMENT  39 

sales  ticket  is  quite  likely  to  be  illegible,  and  to  provide  for  all  details 
needed  for  delivery  necessitates  a  larger  ticket  than  otherwise  would 
be  used. 

One  of  the  most  practical  schemes  ever  devised  is  to  indicate 
the  section  of  the  city  by  the  color,  size,  or  shape  of  the  delivery 
ticket.  The  city  is  first  divided  into  sections,  the  commonly  known 
sectional  divisions  being  used — as  North  side,  South  side,  etc.  When 
the  sale  is  made,  the  customer  is  asked  in  what  section  of  the  city 
he  resides,  and  then  an  appropriate  label  is  selected.  All  labels  are 
the  same  in  form,  but  printed  a  special  color  for  each  section.  The 
label  shown  in  Fig.  19  is  distinguished  by  a  solid  border  and  bar  of 
color,  printed  on  white  paper,  all  type  being  printed  in  black. 

Every  necessary  detail  should  be  provided  for  on  the  label. 
The  one  illustrated  shows  the  date,  the  name  and  address,  near  what 
street,  the  flat  number,  the  name  of  the  salesman,  initials  of  the  in- 
spector, and  amount  (if  any)  of  the  c.  o.  d.  The  caption,  iiear 
what  street,  is  of  special  importance  in  a  large  city  for  it  assists  greatly 
in  routing  deliveries.  An  address  may  be  given  as  457  E.  72nd  St., 
but  if  it  is  known  that  this  is  near  Baker  Ave.,  it  is  much  more  quickly 
located  by  the  driver. 

This  label  is  written  by  the  sales  person  and  sent  with  the  goods 
to  the  packers.  Here,  it  is  pasted  on  the  package — unless  it  is  a 
c.  o.  D.  package,  in  which  case  it  is  first  initialed  by  an  inspector. 
The  same  is  true  of  charge  sales. 

Routing  Deliveries.  The  delivery  system  proper  begins  with 
the  routing  of  the  deliveries,  which  is  the  first  thing  done  after  the 
goods  reach  the  shipping  room.  Bins  should  be  provided  for  the 
different  sections  of  the  city  and  if  the  business  warrants,  these  sec- 
tional bins  should  be  subdivided,  the  subdivisions  representing  routes. 
Separate  bins  should  be  provided  for  c.  o.  d.  deliveries,  and  it  is 
well  to  have  a  bin  for  special  deliveries,  such  as  those  to  suburban 
points,  which  usually  are  forwarded  by  express. 

When  the  packages  reach  the  shipping  room,  they  are  sorted 
into  these  bins.  As  an  aid  to  sorting,  the  colored  labels  de- 
scribed prove  their  value.  Since  the  color  represents  the  section, 
packages  can  be  sorted  as  rapidly  as  they  can  be  handled.  After 
they  are  sorted  according  to  sections,  the  packages  are  again  sorted 
into  routes. 


351 


40 


THE  SHIPPING  DEPARTMENT 


In  certain  lines,  such  as  groceries,  the  average  delivery  is  made 
lip  of  several  packages,  all  of  which  are  put  into  a  basket.  Here, 
the  bins  must  be  differently  arranged,  being  but  divisions  of  the  floor 
space.  But  the  scheme  of  using  colored  labels  or  shipping  tags 
could  be  used  to  advantage,  especially  in  a  downtown  store  delivering 
to  all  parts  of  the  city.  For  a  grocery  with  a  trade  confined  to  its 
immediate  neighborhood,  the  sectional  divisions  are  not  needed,  but 
the  goods  should  be  sorted  by  routes. 


1         Pecefved  from  MAURICE  L.  ROTHSCHILD  in  good                                           ...                -»•-- 
[        ortier  the  following  packages  far  delivory: 

\0 

NAME 

STREET  &  Na 

NUMBER 
PACKAGES 

SALE 
NO. 

SIGNATURE 

l-TV- 

CALLS 

^A-A- 

1 

\ 

1 

.!  ,    , 

Fig.  20.     Regular  Delivery  Sheet 

The  Delivery  Sheet.  After  routing,  the  next  step  is  to  record 
the  deliveries.  In  all  modern  stores,  deliveries  to  each  section  of  the 
city  are  made  at  stated  hours.  As  a  rule,  the  deliveries  are  entered 
on  the  sheets  just  prior  to  the  hour  for  the  delivery. 

Fig.  20  shows  the  form  of  the  regular  deliveiry  sheet,  which  is 
used  for  cash  and  charge  sales.  This  sheet  shows  the  date,  the 
name  and  address,  number  of  packages,  and  sale  number.  The 
column  at  the  extreme  right  is  for  the  signature  of  ithe  customer  as  a 


352 


THE  SHIPPING  DEPARTMENT  41 

receipt  for  the  goods.  Whether  or  not  it  is  either  necessary  or  wise 
to  attempt  to  secure  the  signature  of  the  customer,  is  a  disputed  ques- 
tion, and  probably  depends  on  the  class  of  goods  delivered  and  the 
extent  of  the  business.  A  jeweler  who  delivers  a  valuable  piece  of 
jewelry  would  be  justified  in  demanding  a  receipt,  but  this  would  be 
unnecessary  for  a  grocer.  The  shipping  clerk  in  one  department 
store  gives  it  as  his  opinion  that  the  signature  is  not  necessary,  and, 
for  proof,  points  to  a  record  of  but  two  inexpensive  packages  lost  in 
a  year. 

Call  for  Piickage 


Address. 


Near  what  Street — - — —Flat. 

Instructions ,.  . . 


Fig.  21.     Delivery  Boy's  Call  Tag 

At  the  bottom  of  the  delivery  sheet,  calls  are  listed.  This  refers 
to  calls  by  the  driver,  where  no  deliveries  are  to  be  made.  In  a  cloth- 
ing or  department  store,  it  frequently  is  necessary  to  call  for  goods 
that  have  been  delivered  on  approval,  or  on  which  alterations  are  to 
be  made. 

The  delivery  sheets  are  put  up  in  book  form  in  duplicate.  The 
original  is  perforated  so  that  it  can  be  detached,  while  the  duplicate 
remains  in  the  book.  A  book  is  used  for  each  wagon,  and  each 
driver  signs  for  his  deliveries  in  the  space  provided  for  that  purpose 
at  the  head  of  the  sheet.  The  driver  then  takes  the  delivery  sheet, 
placing  it  in  a  spring-back  binder,  and  turns  it  in  on  his  return.  It 
is  well  to  keep  these  sheets  on  file  in  the  shipping  room  for  at  least  a 
month — when  it  is  safe  to  destroy  them. 

When  a  call  is  to  be  made,  a  special  tag  is  given  to  the  driver  to  be 
attached  to  the  package.  Tliis  tag,  which  is  shown  in  Fig.  21,  gives 
the  address,  and  any  special  instructions  that  may  be  necessary. 

353 


IJ  TUK  SHIPPING  department; 

When  the  call  is  for  a  garment  to  be  altered,  the  person  taking 
he  call  usually  ascertains  what  is  to  be  done,  and  writes  the  instruc- 
tions on  the  back  of  the  tag.  In  case  no  instructions  are  given  in 
advance,  they  are  usually  given  when  the  call  is  made — in  which 
case  they  are  written  on  the  tag  by  the  driver.  When  the  package 
reaches  the  shipping  room,  reference  to  the  tag  shows  what  is 
wanted,  and  the  package  can  be  forw^arded,  at  once,  to  the  proper 
department.  Carrying  out  the  color  scheme,  the  call  tag  should  be 
of  a  special  color  to  distinguish  it  from  the  delivery  tag. 

C.  0.  D.  Deliveries.  Of  special  importance  are  c.  o.  d.  de- 
liveries. There  must  be  a  positive  record  which  will  make  it  possible 
to  check  every  item  at  every  stage,  including  all  items  collected. 


Namp  , I  Name.,_ 

j 
Addrea© , j  Addreas 

•C.  O.  D. 

Salesman Dept 


!  No 

j 

j  Amount    $. 


1  Date. 


RECEIVED    PAYMENT 


Dote By . 


I  Collected  by. 
j 


Fig.  22.     Collect  oa  Delivery  Tag 

The  handling  of  a  c.  o.  d.  item  begins  with  the  sale,  when  the 
sales  person,  in  addition  to  noting  on  the  sales  slip  that  the  item  is 
c.  o.  D.,  makes  out  a  tag,  as  shown  in  Fig.  22.  This  tag,  which 
should  be  of  a  special  color,  is  made  with  a  perforated  stub,  and  on 
the  stub  the  information  on  the  tag  itself  is  duplicated.  The  sales 
person  fills  in,  on  both  the  tag  and  the  stub,  the  name  and  address 
of  the  customer,  the  amount  to  be  collected,  his  own  initials,  the 
number  of  the  department,  and  the  date. 

The  goods  and  the  duplicate  sales  ticket  go  to  the  packing  room, 
while  the  original  sales  ticket  and  the  tag  go  to  the  office,  where  they 
are  taken  charge  of  by  the  c.  o.  d.  clerk.  This  clerk  registers  the 
sale  on  a  c.  o.  d.  register,  stamps  the  number  on  the  tag  and  stub, 

354 


THE  SHIPPING  DEPART]MENT 


43 


and  returns  them  to  the  packing  room.  The  tag  is  then  attached,  and 
the  package  sent  to  the  shipping  room,  while  the  duplicate  sales  ticket 
goes  to  the  auditor's  office. 

In  a  store  where  tlie  packages  are  wrapped  in  the  department 
making  the  sale,  the  routine  is  changed  to  the  extent  of  sending  the 
package  direct  to  the  shipping  room,  with  a  plain  address  label. 
The  package  is  held  in  the  shipping  room  until  the  tag,  sent  direct 
from  the  office,  is  received. 


1     Receivea  from  MA  URICE  L.  RO  THdCflILD  in  good            Date ■, — \Q — 

[     orden  the  following  C.O.D.  Pdckeges  for  delivsm 

j                                                                                                                     , rirTwor 

' 

\0 

NAME 

STREET  &  NO. 

NUMBER 
PACKAOES 

•SALE 

NO. 

co.o. 

NO. 

AMOUNT 

SIQNATURE 

io 

■ 

Fig.  23.     Special  C  O.  D.  Delivery  Book 

After  they  are  sorted  by  routes  in  the  shipping  room,  all  c.  o.  d. 
items  are  entered  in  special  delivery  boolcs,  as  in  Fig.  23.  This  book 
is  made  in  the  same  style,  as  the  regular  delivery  book,  with  per- 
forated sheets,  but  should  be  made  of  paper  of  a  different  color. 
The  form  differs  but  slightly  from  that  of  the  regular  book,  the  only 
difference  being  the  addition  of  columns  for  the  c.  o.  D.  number 
and  the  amount  to  be  collected. 

When  a  driver  makes  a  c.  o.  d.  delivery,  ho  gives  the  customer 
a  receipt  on  the  tag,  P^ig.  22,  hut  retaiivs  the  stub.      On  returning 


srjr) 


4t 


THE  SHIPPING  DEPARTMENT 


from  a  delivery,  lie  turns  in  the  stub  with  the  money,  and  the  pay- 
ments are  checked  on  the  duplicate  of  his  delivery  sheet.  If  a  pack- 
age is  not  delivered,  it  must  be  turned  in  with  the  complete  tag 
attached.  All  returned  c.  O.  T>.  packages  are  checked  on  the  de- 
livery sheets  and  entered  on  the  sheets  for  the  next  delivery.  This 
system  insures  a  positive  check  on  the  driver,  for  he  must  turn  in 
either  the  package,  or  the  stub  and  the  money. 


C.O.D 

.  RECORD 

n«+«a 

NAMF 

STREET  8c  NO. 

NUMBER 
PACKAGES 

SALE 
NO. 

C.O.D. 

NO. 

AMOUNT 

ROUTE 
NO. 

DRIVER 
NO. 

Fig.  24.     Office  Record  of  C.  O.  D.  Items 

The  office  record  of  c.  o.  d.  items  is  in  the  form  of  a  register,  as 
shown  in  Fig.  24.  This  register  is  provided  with  the  same  columns 
as  the  c.  o.  D.  delivery  sheet,  with  columns  added  for  the  route 
number  and  the  driver's  number,  these  columns  being  used  only  in 
the  shipping  room.  All  items  are  registered  in  numerical  order, 
a  new  series  of  numbers,  starting  with  No.  1,  being  used  each  month. 
The  book  is  made  with  duplicate  sheets,  the  original  perforated. 
Once  a  day,  or  as  fast  as  the  pages  are  filled,  the  originals  are  sent 
to  the  shipping  room. 


356 


THE  SHIPPING  DEPARTMENT 


45 


The  original  sales  ticket  is  placed  in  an  envelope,  stamped  with 
the  c.  o.  D.  number  and  filed  numerically  by  the  c.  o.  d.  clerk, 
who  also  keeps  the  register.  In  the  system  described,  the  tag  receipt 
takes  the  place  of  the  sales  ticket;  but  in  many  stores  it  is  considered 
best  to  send  the  sales  ticket  with  the  package. 

When  the  shipping  clerk  receives  the  record  sheet  from  the 
office,  he  checks  the  items  against  his  delivery  books  and  enters  the 
route  number  and  driver's  number.  As  described,  each  driver's 
stubs  and  returned  packages  are  first  checked  against  his  delivery 
sheet;  all  stubs  are  then  checked 


Telephone  Harrison  g62l 
Date 


Mr.. 


Time. 


.Address. 


►Ve  called  to  make  delivery  of  (ockage 
and  found  no  one  at  home. 


Per 

Pkg.  leff  with 


MAURICE  L.ROTHSCHILD 

Specialists  In  good  CloTJies 
and  notMng  et&e^ 

SW.  COR.  JACKSON  &>  STATE 


Fig.  25.    Notice  of  Attempt  to  Deliver 


against  the  record  sheet,  which 
makes  a  double  check  in  the  ship- 
ping room.  If  a  package  is  re- 
fused it  is  returned  either  to  the 
department  or  the  general  stock- 
room, and  a  receipt  obtained  on 
the  back  of  the  tag.  The  ship- 
ping clerk  then  returns  the  record 
sheet  to  the  office,  with  the  money 
collected  and  the  tags  represent- 
ing refused  packages. 

Sales  tickets  and  cash  are 
turned  over  to  the  cashier,  while 
tags  and  sales  slips  of  refused  packages  are  sent  to  the  auditor.  The 
auditor  can  check  both  the  cash  collected  on  c.  o.  d.'s  and  returns 
against  the  duplicate  sales  tickets  in  his  possession. 

Undelivered  Goods.  One  of  the  annoyances  met  with  in  the 
delivery  department  of  a  large  store  is  the  difficulty  in  making  de- 
liveries because  people  are  not  at  home.  Unsuccessful  calls  are  com- 
mon, and  while  it  is  quite  the  general  custom  to  leave  packages  with 
a  neighbor,  it  is  not  always  possible  to  do  this,  which  means  that  the 
package  must  be  returned  to  the  store.  And  it  frequently  happens 
that  this  brings  forth  a  vigorous  complaint  from  the  customer,  who  is 
positive  that  the  delivery  could  have  been  made. 

One  merchant  has  found  a  simple  solution  of  this  difficulty, 
which  could  be  adopted  with  profit  by  all  merchants  in  large  cities. 
Drivers  are  supplied  with  slips  printed  as  shown  in  Fig.  25.  When 
no  one  is  found  at  home,  one  of  these  slips  is  filled  out  and  left  in  the 


357 


40 


THE  SHIPriXC;  DEPARTMENT 


mail  box.  It  shows  the  dtite,  tune  of  day,  name  of  driver,  and  name 
of  person  with  whom  the  package  has  been  left.  The  use  of  this 
slip  eliminates  complaints  and  proves  a  great  convenience  to  the 

customer. 


Date. 


r.ir. 


Dear  S/r>:-         We  are  ho  fating  package  addressed  tv  you  and 
wh;c/)  wae  returned. 


our  Immediate  attention.  ^ 


Address  Shipping   Dept. 


Kindly  advice  in  regard  to  same  &o  we  can  give  it 

Youro  fruit/, 

MAURICE  L.  ROTHSCHIlfD' 
Per * 


Fig.  26.     Post-Card  Notice  of  Attempted  Delivery 

WTien  undelivered  packages  are  returned  to  the  store,  and 
nothing  is  heard  from  the  customer  within  48  hours,  a  postal  card 
notice.  Fig.  26,  is  mailed  to  the  customer.     Frequently,  failure  to 


/ 

Mrw 

y                                      From 

^         MAURICE  L.  ROTHSCHILD 
S.W  Corner   Jackson  8f' State 

Tli/G  package  must  be 
delivered  at 

This  package  must  be 
delivered  at 

^^      Mr 

\~^_}~1 

RpforP                 OY.Ior.k 

TO-DAY 

Rafnre               ft'rHock 

TO-DAY 

N. 

\ 

Fig.  27.     Special  Delivery  Tag 

deliver  is  due  to  the  wrong  address,  but  even  if  the  correct  address 
is  not  found  in  the  directories,  the  postal  authorities  usually  succeed 
in  locating  the  customer. 


358 


THE  SHIPPING  DEPARTMENT 


47 


5PECIAL  DELIVERY  TAG 


Inspt.  Sfaiup 


Time 


Messenger  to 
Packing  Room. 


Name 


Time 


Packers  Stamp 


Time 


Messenger  to 
Chute  on  S.R. 


Special  Deliveries.  Every  store,  especially  in  large  cities,  finds 
it  necessary  to  make  special  deliveries.  The  customer  from  out  of 
town,  or  about  to  leave  town,  wants  a  package  delivered  before  a 
certain  hour;  the  delivery  may  be  to  a  depot,  hotel,  office,  or  even  a 
residence.  ,  These  are  the  deliv- 
eries which  cannot  wait  for  the 
regular  trip  of  the  wagon,  but 
are  sent  by  a  boy.  The  import- 
ant thing,  so  far  as  the  delivery 
department  is  concerned,  is  to 
get  them  out  on  time. 

Fig.  27  shows  a  tag  for  spe- 
cial deliveries,  used  by  a  cloth- 
mg  house.  The  tag  shows  the 
name  and  address  of  the  custo- 
mer, with  full  particulars  of  the 
time  and  place  of  delivery.  At 
the  end  is  a  perforated  stub  on 
which  the  delivery  instructions 
are  repeated.  Wlien  the  tag  is 
attached  to  the  package  by  the 
sales  person,  the  stub  is  torn  off 
and  sent  directly  to  the  shipping 
room.  The  shipping  clerk  is 
then  on  the  lookout  for  the  pack- 
age, and  is  expected  to  follow  up 
the  proper  department,  which  in 
this  business  usually  is  the  tailor 
shop. 

Another  form  of  special  delivery  tag  used  by  a  department  store 
is  shown  in  Fig.  28.  This  tag  gives  more  detailed  information 
about  each  step  taken,  showing  the  names  of  all  persons  handling 
the  package,  and  the  time  at  which  it  is  handled  by  each. 

When  the  delivery  system  of  a  retail  store  is  studied,  it  is  found 
to  be  made  up  of  simple  methods,  which  are  assembled  to  make  a 
complete  machine.  A  noticeable  feature  of  the  entire  system  is  that 
the  apparently  insignificant  details — the  little  things — are  its  most 
important  parts;  which  is  true  of  all  systems. 


Name 

Time 

Rec'd  inS.R. 

Name 

Time 

SHIPP/NG  ROOM  WILL  DETACH 
TAG  AND   FILE., 


Fig.  28. 


Special  Deli\ery  Tag  for  De- 
partment Store 


359 


INDEX 


361 


INDEX 


The  page  numbers  of  this  volume  will  he  found  at  the  bottom  of  the  pages; 
the  numbers  at  the  top  refer  only  to  the  section. 


Page 
A 

Acknowledgment     of     order     to 

salesman  278 

Administration    vs.    management 
(see   Management  vs. 
administration) 
Advances  of  pay  to  men  112 

Advertising  committee  62 

Advertising  department  88 

Advertising  manager  39 

Advertising   and   sales  organiza- 
tion 127-190 
introduction  127 
outdoor  advertising                       158 
periodical  advertising                     144 
printing  orders  and  tracers           137 
sales  department                           160 
street  car  advertising                    157 
systems  and  records                      129 
where    advertising    and    sales- 
manship meet                     159 
Agencies,  advertising                         146 
Alphabetical  61c,  cross-indexing       172 
Amounts,  analysis  of  in  invoices     267 
Apphcation  card  of  workmen  98 
Assembling  and  erecting  depart- 
ments                81,  83,  84,  91 
Assistant  superintendtmt  41 
Authority  of  officers  of  company 

25,  44,  91 

B 

Back  orders 

Basing  points,  freight 

Billboards 

BiUing  machines 


272,  329 
325 
159 
252,  290 
arrangement  of  billing  machines 

in  large  business  houses    295 

Note. — For  page  numbera  tee  fool  of  pages. 


Page 
Billing  machines  (continued) 
carbon    paper    cut    for     this 

class  of  work  291 

colored  sheets  298 

compound  forms  300 

general       remarks       regarding 

billing  machines  292 

handUng  credit  memoranda         292 
loose-leaf     sales     sheet     with 

separate  invoices  291 

loose-leaf  sheets  with  invoices 

in  blanket  form  290 

tabulators  on  billing  machines     294 
use  of  computing  machines  296 

using  sheets  serially  292 

Billing  and  order  recording  245 

devices  of  future  310 

handling   orders   and   bills   on 

bilUng  machines  290 

introduction  245 

loose-leaf  sales  sheets  and  in- 
voices 254 
machines  for  manifolding             249 
order  work  of  wholesale  grocers  270 
stationery                                      279 
Binders                                              279 
Blinds,  use  of                            266,  290 
Board  of  directors                        23,  29 
Board  of  managers  24 
Book  typewriter                               250 
Book-writing  machines                     249 
Branch  house  credits                        20S 
Business    organization    and    con- 
trol                                 11-68 
charting  orgam'zatiou                      25 
charting  salary  and  wage  dis- 
tribution                               47 
committee  system                          69 


363 


INDEX 


Page 

Business  organization  and  control 

(continued) 

co-operation  17 

duties  clearly  defined  44 

effect  of  phj-sical  arrangement  53 

emplojTnent  department  42 

executive  organization  22 

expense  distribution  chart  52 

factors  influencing  production  11 

general  modification  42 

oral  orders  cause  confusion  65 

uniform  blanks  67 

Buying  department  29 


C.  0.  D.  deliverice 

354 

Capital 

11,  73 

combinations  of 

73 

Capitalist 

14,  17,  72 

Carbon  paper 

287,  291 

color 

287 

copy  carbon  papers 

289 

cut  for  billing  machines 

291 

durabihty  of  color 

289 

finish 

287 

four-pound  paper 

288 

full-carbon  papers 

289 

pen  carbon 

289 

pencil  carbons 

289 

seven-poimd  paper 

288 

t€n-pound  paper 

288 

troubles  and  remedies 

289 

wearing  quality  of  paper 

290 

Card  follow-up 

169 

Card  transcripts 

205 

Carpenter  shop  83,  84 
Checking  returns  from  advertis- 
ing 149,  155 
Chief  accountant  38 
Chief  engineer  41 
Chief  stenographer  38 
JDhronological  file,  cross-indexing     171 
Class  rates,  freight  316 
Classifications,  freight  315,  322 
CUppings,  advertising  129 
Collection  systems  216 
card  tickler  219 

Note. — For  page  numbers  see  foot  of  pages. 


Page 
Collection  systems  (continued) 
cash  receipts  231 

collecting  from  ledger  223 

collections  by  attorneys  242 

collector's  card  235 

collector's  receipt  236 

cross-indexing  219 

dupUcate  invoices  216 

filing  contracts  235 

handhng  drafts  226 

installment  collections  226 

installment  ledger  230 

installment  register  229 

local  collections  222 

mail-order  installment  account     239 
mail-order    installment    collec- 
tions 236,  240 
monthly  statements  221 
statement  of  installment  ledger  231 
Collection  tickler,  cross-indexing     219 
Collections  (see  Credits  and  col- 
lections) 
Colored-sheet  system                270,  298 
Commercial  division  of  business        24 
Committee  secretaries  63 
Committee  system  59 
advertising  committee  62 
departmental  factory  committees  60 
general  factory  committee  60 
job  bosses  61 
organization  committee  62 
sales  committee  61 
Commodity  rates                       316,  323 
Compound  forms                              300 
goods  almost    completely 

shipped  300 

goods  shipped  for  entire  orders   300 
ComptroUer  25,  37,  43 

Computing  maciiines,   use  of  in 

connection  with  bilUng      296 
Condensed  rate  file  321 

Contracts,  advertising  146 

Copy  carbon  paper  289 

Copy  proofs,  advertising  136 

Credit  information,  filing  204 

Credit  man  (see  Credits  and  col- 
lections) 


364 


INDEX 


Page 

Credit  memoranda  292 

Credit  men's  associations  203 

Credits  and  collections  40,  89,  191-244 

branch  house  credits  208 

collections  212 

credit  man  191 

information  required  192 

recording  credit  information         204 

somxes  of  information  199 

Customers'  cards,  indexing  178 

Customers'  lists  173 

Cuts,  advertising  131,  134 

Cylinder  billing  machine  251 

D 

Daily  sales  records  187 

Day  time  vs.  job  time  103,  108 

Decimal  tabulator  294 

Delivery  system,  retail  (see  Retail 

deUvery  system) 
Department  records  266 

Departmental  authorities  35 

Departmental  factory  committees     60 
Designs,  advertising  131 

Discharged  or  quit  drawer  99 

Discipline  of  shop  92 

Drafts,  handling  214,  226 

Drilling  and  boring  department        91 
Duplicate  invoices  216,  264 

E 

Efficiency 
EUte  type 

Employe  (see  Labor) 
Employer  (see  Capitalist) 
Employment  agent 
Employment  department 
Engineering  department 
English  business  methods 
Engravings,  advertising 
Erecting  department  81, 

Executive  committee 
Executive  organization 

differentiation  of  functions 
Expense  distribution  chart 
Experimental  room 
Export  shipping 
Express  shipments 

Note. — For  page  numbers  nee  fool  of  pages. 


Page 
F 

Factory  buildings,  height  of  85 

Factory  manager  89 
Factory  organization  and  control 

25,  69-125 

machine  shop  management  80 

manufacturing  69 

shop  methods  and  records  96 

Factory  plans  53 

Fihng  devices  68 

Filling  orders  326 

back  orders  329 

Financial  statements  194 

Finished  parts  store-room  83,  84 

Flat-bed  biUing  machines  249,  251 

Flat  wage  rate  15 

Follow-up  systems  167,  183 

Foreign  advertising  146 

Foremen  41,  91 

Forge  shop  81 

Form  letters  162,  213 

collection  letters  213 

Foundry  buildings,  height  of  86 

Free  market  15 
Freight  (see  Shipping  department) 

Freight  claims  338 

Freight  classifications  315,  322 

Freight  tariffs  318 

French  business  methods  248 

Full  carbon  papers  289 


20 

^      «*.        V^^-^W—        J,„J,X,-.^ 

285 

G 

Gear-cutting  department 

91 

General  departments 

89 

101 

General  factory  committee 

60 

42,  97 

General  manager              24,  29,  37,  86 

81,  83 

General  office 

83 

3 

General  superintendent 

89 

133 

Geographical  index 

178 

83,  91 

German  business  methods 

247 

24,  29 

Goods  purchased  outside,  bilUng 

268 

22 

Gothic  type 

285 

22 

52 

83,  84 

Grinding  department 

91 

H 

334 

Heavy  turning  departmenf 

91 

345 

Houpe  communications 

65 

S65 


INDEX 


Page 
I 

Improved  machinery  15 

Increases  in  pay  111 

Individual  record  card  100 

Industrial  conditions,  betterment 

of  75 

Industrial  development  69,  71,  76 

Industrial  freedom  70 

Industrial    undertakings    not 

private  business  IS 

Insertion  of  advertisement,  orders 

for  149 

Installment  collections  226 

collector's  card  235 

collector's  receipt  236 

filing  contracts  235 

ledger  230 

mail-order  installment  accounts  239 
mail-order    installment    collec- 
tions 236 
register  229 
statement  of  ledger                       231 
Interchangeable  manufacturing         76 
Iron  and  brass  foundry                81,  85 
Issuing  stock  and  materials             117 


Job  bosses 

61 

Job  time 

103,  109 

K 

Keying  advertisements 

149 

Keying  form  letters 

163 

Labor  11,  14,  16,  17,  72 

Land  11 

Large  roman  type  285 

Ledger,  collecting  from  223 

Lines  of  authority  25,  44,  91 

Local  agent  plan  of  selling  87 

Local  collections  222 

Local  credit  correspondents  200 

Loose-leaf   sales    sheets    and    in- 
voices 254,  290 
analysis     of     quantities     and 

amounts  267 

Note. — For  page  nymbert  see  foot  of  pages. 


Page 
Loose-leaf   sales  sheets  and    in- 
voices (continued) 
department  records  266 

duphcate  invoices  264 

goods  purchased  outside  268 

information  on  sales  sheet  not 

on  invoice  267 

with  invoices  in  blanket  form      290 

with  separate  invoices  291 

unit  billing  270 

Loose-leaf  sheets  279 

Losses,  reasons  for  19 

M 

Machine  shop  management   (see 
also    Factory    organiza- 
tion and  control)  SO 
modern  meaning  of  shop  man- 
agement 80 
official  communications  93 
organization  of  manufacturing 

plant  86 

shop  management  91 

successful  management  94 

typical  manufacturing  plant  81 

Mail  -  order     branch      of     sales 

department  161 
classification  of  sales  176 
cross-indexing  alphabetical  file  172 
cross-indexing  chronological  file  171 
follow-up  systems  167 
form  letters  162 
indexing  customers'  cards  178 
Usts  of  customers  173 
Mail-order  installment  accounts  239 
Mail-order      installment      collec- 
tions                            236,  240 
Management 
machine    shop     (see    Machine 

shop  management) 

vs.  administration  11 

effects  of  improved  machinery  15 
employer  and  employe  both 

seek  gain  14 

flat  wage  rate  15 

laborers  are  citizens  16 

measure  of  wages  13 


see 


INDEX 


Page 
Management  (continued) 
machine   shop    (see    Machine 
shop  management) 

mutual  profit  in  trade  13 

need  for  fi-ee  market  15 
results  of  slave-driving 

methods  12 
wages  measm-ed  by  produc- 
tion 14 
Manager,  successful  95 
Manifolding,  machines  for  249 
Manufacturing                               25,  69 
betterment    of    industrial    con- 
ditions 75 
combinations  of  capital  73 
development    of   American    in- 
dustrial enterprises  71 
early  New  England  mechanics  70 
industrial  freedom  70 
interchangeable  manufacturing  76 
manufacturing   conditions   and 

developments  69 
methods   of   modem   manufac- 
turing 76 
relations  of  capital  and  labor  72 
tools  of  early  mechanic  72 
Manufacturing  departments        81,  83 
Manufacturing  division   of  busi- 
ness 24 
Manufacturing  enterprise,  organi- 
zation of  25 
Manufacturing    plant,    organiza- 
tion and  layout  of         81,  86 
Map   and   tack  system   of  rout- 
ing salesmen  179 
Medium  roraan  type  285 
Memoranda,  advertising  129 
Mercantile  agencies  199 
Mercantile     business,     organiza- 
tion of  29 
MiUing   machine,    importance   of 
in  development  of  man- 
ufacturing 76 
Milling  machine  department  91 
Monthly  sales  records  189 
Monthly  statements  221 
Motion  studies,  effect  on  wages  15 

Not^. — For  page  numbert  »e»  fntl  nf  pages. 


o 


Page 


Office,  planning  the  54 

Official  communications  93 

Oral  orders,  danger  in  65 

Order  form,  simple  276 

with  copy  for  shipping  depart- 
ment 278 
Order  recording  (see  Billing) 
Order    work    of    firms    receiving 
orders     from     salesmen 
(see     Wholesale     firms, 
order  work  of) 
Orders 
for  insertion  of  advertisements    149 
oral  65 
Organization  (see  Business  organi- 
zation and   control  and 
Factory  organization 
and  control) 
Organization  committee                     62 
Outdoor  advertising                           158 

P 

Paint  shop  83,  84 

Pattern-making  department  81,  84 

Pattern  storage  room  83,  84 

Paying  employes,  methods  of  111 

Pay-roll  sheet  112 

Pen  carbon  289 

Pencil  carbon  289 

Periodical  advertising  144 

advertising  contracts  146 

checking  returns  149 

orders  for  insertion  149 

rate  cards  144 

Personal     salesmanship     division 

of  sales  department  17S 
follow-up  of  dealers  and  sales- 
men 183 
reports  of  calls  181 
routing  salesmen  179 
salesman's  expense  accounts  186 
Phj'sioal  arrangement,  effect  of  53 
factory  plans  53 
planning  office  54 
store  plans  57 
Pica  type  285 


367 


INDEX 


Page 

Page 

Planing  department 

91 

Retail  delivery  system  (continued) 

Planning  department 

89 

special  deliveries 

359 

Plant  orders 

114, 

116 

undelivered  goods 

357 

Plating  department 

91 

Retail  dry  goods  billing 

302 

Police  regulations  of  shop 

92 

Retm-ns  from  advertising,  check- 

Polishing department 

91 

ing 

149,  155 

Power  plant 

81 

,84 

Roman  type 

285 

Preliminary  engineer 

88 

Route  cards 

181 

Premium  work  rates 

112 

Routing  deliveries 

351 

Printing,     orders,     tracers, 

and 

Routing  salesmen 

179 

records 

137 

Routing  shipments 

324 

Production,  factors  influencing 

11 

co-operation 

17 

S 

management  vs.  administration 

11 

statement  of  problems 

11 

Salary  distribution  chart 

47 

Production  departments 

91 

Sales,  classification  of 

176 

Production  division 

86 

Sales  committee 

61 

Production  engineer 

81 

,  89 

Sales  division                        39 

,  86,  160 

Production  orders 

114, 

115 

advertising  manager 

39 

Production  superintendent 

91 

branches 

161 

Profit  and  wages 

18 

credit  man 

40 

Promotion 

101 

sales  manager 

39,  88 

Protective  tariff,  effect  on  wages 

15 

sales  records 

186 

Publicity  department  (see  Adver- 

Sales manager 

39,  88 

tising  department) 

Sales  records 

186 

Purchasing  agen1> 

42 

daily 

187 

Q 

monthly 

189 

salesmen's 

189 

Quantities,  analysis  of  in  invoices 

267 

Salesmen's  expense  accounts 

186 

Salesmen's  records 

189 

R 

Salesmen's  report  cards 

181 

Rate  cards,  advertising 

144 

Selling  department 

29 

Piecording-clock  time  cards 

106 

Serial  numbers 

292 

Records 

Service  card 

99 

advertising 

129 

Service  real  basis  of  profits 

18 

credit 

204 

Shipments,  checking 

330 

form  letter 

167 

Shipping  clerk 

314 

shop    (see  Shop   methods 

and 

class  rates 

316 

records) 

classification  index 

322 

Reference  information 

299 

commodity-rate  file 

323 

Requisitions 

120 

commodity  rates 

316 

Retail  credit  reporting  agencies 

202 

condensed  rate  file 

321 

Retail  delivery  system 

349 

fifing  tariffs 

318 

C.  0.  D.  deliveries 

354 

freight  tariffs 

318 

dehvery  sheet 

352 

index 

320 

delivery  tag 

350 

information  required 

314 

routing  dehveries 

351 

routing  shipments 

324 

-Vofe. — Tot  page  numbers  see  foot  of  pnget. 


368 


INDEX 


Page 

Shipping  department 

313 

cheeking  shipments 

330 

export  shipping 

334 

express  shipments 

345 

filling  orders 

326 

freight  claim 

338 

introduction 

313 

retail  delivery  system 

349 

shipping  clerk 

314 

Shipping  room 

83,  85 

Shop  foremen               , 

41 

Shop  methods  and  records 

96 

employment  agent 

101 

foUow-up  methods  for  tracing 

orders  in  the  shop  121 
giving  orders  for  manufactur- 
ing work  114 
importance  of  records  96 
individual  record  of  standing  100 
methods  of  paying  employes  111 
plant  orders  116 
production  orders  115 
recording-clock  time-cards  106 
selection    and    employment    of 

workmen  97 
storing  and  issuing  stock  and 

materials  117 

time-card  forms  103 

time  keeping  102 

tool-room  methods  123 

Shop  transportation  83 

Single-stop  tabulator  294 

Slave-driving  methods  12 

Special  dehveries  359 

Spht  orders  274 

Stands,  or  billboards  159 

Statements,  monthly  221 

Stationery  279 

binders  279 

bhnds  290 

carbon  paper  287 

designing  stationery  283 

loose-leaf  sheets  279 

styles  of  type  285 

for  typewritten  work  281 

Stock  clerk  (see  Storekeeper) 

Store  plans  57 

NnVr. — For  ■page  numbers  see  foot  of  pages. 


Page 
Store-room  83,  84 

Storing  stock  and  materials  117 

Street  car  advertising  157 

Sub-production  orders  115 

Suggestion  plan  64 

Superintendent  25,  40,  80,  89 

assistant  superintendent  41 

chief  engineer  41 

shop  foremen  41 

T 
Tables 
chart  for  checking  retail  sales 

sUps  304 

comparison    of    daily    sales   of 

clerks  305 

Tabulators  on  bilhng  machines       294 
Tariffs,  freight  318 

Tickler  method  of  follow-up 

168,  171,  219 
cross-indexing  171 

Time-card  forms  103 

Time  distribution  103 

Time  keeping  102 

Time  studies,  effect  on  wages  15 

Tissue  book,  making  wet  copy  of 

bill  m  253,  254 

Tool  room  83,  84,  123 

Tools,  development  of  72 

Tracing  orders  in  shop  121 

Trade,  mutual  profit  in  13 

Traffic  manager,  need  of  313 

Transfer  office  122 

Traveling     canvassers,   plan     of 

selhng  8S 

Travehng  salesmen,  credit  infor- 
mation from  201 
Treeing  of  carbon  paper  289 
Trusts  73 
T3T3ewriter,  use  of  in  billing  250 
Typewriter  type  285 
Typewritten  work,  stationery 
printed  and  designed  for 

281,  283 

U 

Undehvered  goods  357 

Uniform  blanks  67 

Unit  billing  270 


360 


INDEX 


Page 


Page 


w 

Wholesale   firms,    order   work  of 

Wage  distribution  chart 

47 

(continued) 

Wages 

14,  15,  18 

back  orders 

272 

measure  of 

13 

simple  order  form 

276 

and  profits 

18 

simple  order  form  with  copy 

Weights,  analysis  of  in 

invoices      267 

for  shipping  department 

278 

Wet  copy  of  bill  in  tissue  book 

spUt  orders 

274 

253,  254 

Working  authorities  of  officers  of 

Wholesale  firms,  order  work  of       270 

company 

25 

acknowledgment    of 

order    to 

Workmen,  selection  and  employ- 

salesman 

278 

ment  of 

97 

Note. — Pot  page  numhers  see  foot  of  paoes. 


370 


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